Lesson Tag: OZ112IL-BR

• Qualified Opportunity Funds raise capital with the intention of fostering improvement in the lower-income or economically disadvantaged neighborhoods of the investment, while considering all the potential risks and implications. 

• Gentrification is a major consideration when infusing capital gains from a QOF into an Opportunity Zone
  • Of the top 100 most gentrified Opportunity Zones, 75 are within urban areas    
  • The highest percentage of OZs are located in Rust Belt metropolitan areas
  • OZs in tech hubs and hotspots are also experiencing high rates of gentrification  
  • Most of the least-gentrified OZs are located in Sun Belt cities

• Recruiting and developing local area talent with commitment to DEI practices can stimulate the involvement of local markets and business practices, in effort to lessen the negative aspects of any gentrification occurring. 

Descriptions of Qualified Opportunity Funds (QOFs) often focus on the property development work that takes place.  An important aspect of QOF’s that is sometimes overlooked are the QOF sub-funds. 

• A QOF might choose to invest in a sub-fund which, in turn, channels money into Qualified Opportunity Zone (QOZ) property. 

Due diligence is required for any investment and there are specifics requirements for QOF and sub-fund investments. 

• QOFs and sub-funds must pass a specific asset test every six months.
  • Additionally, QOZ properties in which a QOF/sub-fund invests are required to be “substantially improved” within 30 months. 

It’s important to understand the requirements and risks involved, and how to protect your investments in QOFs and sub-funds.