Several benefits come from investing in Opportunity Zones, including high gains by removing federal capital profit taxes during reviving underserved communities. Opportunity Zones offer numerous benefits for investors, but their distinct structure presents significant importance for bridge lenders. Opportunity Zones are designated locations across the country identified as needing a total economic revamp by state and federal agencies. Examples of these locations are; several blocks along the Las Vegas Strip and adjoining regions, across the street from the Staples Center in Los Angeles, or a short walk from central park in Midtown Manhattan.

According to Opportunity Zones legislation, the Qualified Opportunity Fund’s investment must be “significantly enhanced” by thirty months. This rule could be advantageous since bridge lenders specialize in value-add initiatives under truncated timelines. As part of their underwriting process, bridge lenders must assess the proposal’s economic viability. Even though the federal government deems a region to require additional investment incentives, that does not mean it is an unacceptably high risk for lenders.

Unlike standard real estate investments, which have no set deadline for completion, Opportunity Zone investors must make “significant improvements” within 30 months. Thus, Borrowers will have shorter turnaround timelines and seek short-term loans, making them excellent clients for bridge lenders.

To read more about opportunity zones and the numerous benefits it offers lenders, click here.

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