Opportunity Zones has been a buzzword in the real estate investment community since it was established six years ago. But it’s much more than another way of generating profits while reaping big tax benefits.

Instead, Opportunity Zones can also revitalize low-income areas while spurring economic growth.

That’s where local input and engagement come in.

By working with local stakeholders, you can ensure your investments align with the needs and priorities of the community.

The potential benefits for investors

Again, Opportunity Zones can be a great way for investors to save on taxes. Basically, if you sell something and make a profit, you can invest that profit into an Opportunity Fund instead of paying taxes on it. If you hold onto that investment for at least 10 years, any profit you make on it can be tax-free.

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Commercial and residential properties. Infrastructure projects. Community development initiatives. All of these types of projects can potentially generate higher returns because of the focus on low-income communities.

The impact on local communities

However, investors should consider the needs and priorities of the current residents to truly reap the financial rewards. The reason is simple: Collaborating with the people who live and work in these areas helps investors identify the types of revitalization projects that would make the biggest difference on these communities.

And the potential benefits is significant.

  • Improved transportation infrastructure increases access to jobs, education, and healthcare for residents who otherwise might not have had access to it. That can include things like funding for new bus lines, bike lanes, or other forms of public transportation as well as upgrades to existing transportation systems.
  • The addition of grocery stores and other retail businesses can also make a big difference in low-income neighborhoods. Many of these areas lack access to affordable and healthy food options, which contributes to various health issues.
  • Investments in green spaces and parks also positively impact low-income neighborhoods, as research shows green spaces help reduce crime rates, improve mental health, and create a sense of community pride.
  • Likewise, investments in education and workforce development creates opportunities many low-income residents never had. That includes after-school programs, job training initiatives, or other educational programs that help people acquire the skills they need to succeed in today’s economy.
  • Many underserved areas lack access to adequate healthcare facilities. Investments in facilities like this gives residents options they may have never had before.
  • Imagine living in a neighborhood without access to WiFi or other technological resources. Investments in technology infrastructure bridges that gap for these communities.
  • Affordable housing provides safe living spaces for low-income families, which also helps address homelessness and housing insecurity
  • Renewable energy investments help reduce the reliance on fossil fuels (gas, oil) – and it can create jobs and economic opportunities in low-income areas.

Of course, the key to creating meaningful change in low-income neighborhoods is working with local stakeholders and understanding the unique challenges and opportunities facing them. Opportunity Zones’ real estate development projects are then aligned with these types of neighborhoods, which benefits the residents and the investors.