Our Strategy: Nail a Niche 

 
 

While still unknown to the many everyday investors, OZ funds have been gaining traction for the last 18 months, with an understandable dominance from existing real estate investment funds branching out to create their funds. These funds can range from $50M to several billion and are well suited to benefit from the program. Consider an apartment building development fund that can now focus efforts within the zone and enhance returns, or even carry out a planned investment with subpar returns. These funds have a huge advantage, scale. They also have a huge disadvantage, scale. They must deploy very large sums rapidly. This opens up opportunities for small and midsize funds in the market for projects under $10M.

On the flip side, small fix and flippers and individual investors will have a tough time capitalizing on the opportunity. The reason is two-fold. First, funds require a level of sophistication to set-up and administer; you can’t simply buy land in the zone, build something and receive the benefits. Second, and more importantly, the rules generally do not recognize fix and flips as significant enough to receive the benefits. The new rules encourage buy, build, and hold investing. This means a lot of money has to be put in upfront and held, something many small shops are not prepared to do – our Kachina Pines project proves this out.

 

Investment Philosophy

  • We seek projects in the $500K-$5M range. This includes projects that will be too small to bring competition from larger OZ funds and too large for smaller shops or individual investors

  • Our initial focus will be on improving the land through lot splits and development

  • We seek projects with multiple exit strategies, to give us the flexibility to adapt to the market and evolving regulatory environment

  • We seek to invest in the market(s) we know best, beginning with greater Phoenix and Northern Arizona opportunity zones, especially around Flagstaff. We especially like AZ due to their favorable short-term rental laws enabling additional options beyond sell and long-term rent/hold