Origin Investments Vs Reit
While they may seem similar on the surface, the funds listed on Origin are not REITs. In fact, Origins real estate investments differ from traditional REITs in several ways:
- REITs are typically designed to generate fees for the manager. Conversely, Origin is set up to earn investment returns for both their company and all its investment partners.
- Origins principals invest significantly in their own deals. By comparison, very few private REIT managers invest a large amount of capital into their vehicles.
- Origin funds operate through an LLC structure, which means that all tax benefits pass through to investors. In a REIT structure, the tax benefits are captured at the REIT-level. Then, all the income paid out is taxed at the ordinary income rate.
- Private REITs typically pay substantial fees to advisors to sell their products. Origin does not pay a middle man to sell its investments. This means lower fees for its investors and more money invested in properties.
- REITs pull the majority of their fees through transactions. Meanwhile, Origins fees come after its investors make money.
- Origin provides quarterly updates on all investors and gives full transparency into its investments and process. Private REITs are not obligated to provide investors with similar transparency.
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Opportunity Zone Funds: Definition And How To Invest
Opportunity Zone Funds are investment vehicles that provide tax incentives for investors. Partnerships or corporations can establish Opportunity Zone Funds and then invest in a property located within a Qualified Opportunity Zone. These investment vehicles are designed to increase economic development and job creation in distressed communities, as well as offer tax benefits to investors. Lets break down what you need to know about investing in Opportunity Zone Funds. If you have questions, a financial advisor can help you create an investment plan for your financial needs.
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Origin Investments Launches $300m Multifamily Qoz Fund Ii
Origin Investments, following the close of its highly successful inaugural Qualified Opportunity Zone Fund, launched a second QOZ Fund, targeting $300 million in funds. Origins QOZ Fund II will invest in ground-up multifamily development in the fast-growing targeted U.S. markets, and it already has three ground-up developments undergoing due diligence before closing.
Theres been tremendous demand from the investment community and were launching QOZ Fund II, a virtual carbon copy of our first Fund, to create investment opportunities that provide tremendous returns along with substantial tax benefits for investors, said Origin Investments co-CEO Michael Episcope.
Origins QOZ Fund II will embrace the same structure and strategy as its first QOZ fund, which closed in August after raising $265 million and ranked in the top 2 percent of all QOZ funds nationally in terms of capital raised, according to Novogradac, a professional services firm that t
What Are Other Benefits Of Opportunity Zone Investing
Opportunity Zones offer four other attractive benefits to real estate investors compared to the empowerment zones and renewal communities programs previously authorized by Congress:
- Capital gains only need to be reinvested, not the entire proceeds from a previous asset sale.
- Capital gains can be deferred from sales made outside of QOZs, not only from within.
- Any type of capital gain stocks, Bitcoin, precious metals, and more qualify for Opportunity Zone investment.
- Opportunity Funds may be created by syndicators to invest in a variety of QOZ opportunities such as residential rental property.
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What Are Opportunity Funds
A Qualified Opportunity Fund is any private investment vehicle organized as a corporation or partnership with the specific purpose of investing in Opportunity Zones. All qualifying investments must be made through QOFs in order to be eligible for the tax incentive. QOFs must register with the Internal Revenue Service and invest at least 90 percent of their capital in qualifying investments inside Opportunity Zones communities.
How To Invest In Opportunity Zones And Avoid Capital Gains
Its simple: the Qualified Opportunity Zone program encourages real estate investors to put their money to work in low-income areas in the U.S. by offering significant tax benefits, thus spurring economic growth.
The Tax Cuts and Jobs Act passed by Congress in 2017 created the Qualified Opportunity Zone program. By investing realized capital gains in QOZs, real estate investors can reduce their existing capital gains tax liability. Better still, investors can completely eliminate all capital gains tax liability from future value appreciation on Qualified Opportunity Zone investments!
These investment tax incentives give investors the opportunity to nearly double their after-tax returns when compared to a traditional real estate investment. Unsure what the pros and cons are of Opportunity Zones versus a 1031 Exchange? We got you.
Simplify your rental property reporting
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No Taxation On Appreciation
For investors that keep their investment in the fund for at least 10 years, the property will then be equal to fair market value from the date of sale or exchange of the asset. Keep in mind, while this can potentially lower the cost basis, it doesnt eliminate the gain recognized on December 31, 2026.
For example, lets say a taxpayer makes a $5 million investment in a Qualified Opportunity Zone Fund in 2021. If the investor sells the investment in 2031 for $10 million, the $5 million in appreciation is free of taxation. However, the investor will have to pay income taxes since the fund was held beyond 2026. These taxes will correspond with the sale of the investment.
Tax Deferral Through 2026
For investors who want to defer the tax on their capital gains, they can invest in an Opportunity Zone Fund. This must happen within 180 days of the sale of the asset or security. The IRS doesnt recognize any gain in an Opportunity Zone Fund until December 31, 2026, or until the investor sells or exchanges the interest.
For example, if a taxpayer sells an asset for $5 million, which then results in a $5 million capital gain, the investors can invest the proceeds into a Qualified Opportunity Zone Fund. As long as this happens within 180 days of the sale, the investor can avoid capital gains taxation. This allows the investor to keep the $1 million instead of facing possible taxation on the gain . This could potentially provide a substantial return for the investor through the life of the investment.
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As December 31 Qoz Tax Benefit Deadline Looms Origin Investments Predicts Surge In Year End Real Estate Investing
CHICAGO, December 01, 2021—-Top-performing real estate investment manager Origin Investments sees investments in Qualified Opportunity Zone funds surging as the December 31 deadline approaches for contributions that can qualify for a 10% reduction on deferred capital gains taxes. To meet demand, the firm launched its Qualified Opportunity Zone Fund II in October after its highly successful inaugural QOZ Fund I closed. Fund II already has six multifamily developments in its pipeline.
This press release features multimedia. View the full release here:
“Investor appetite in opportunity zones has accelerated significantly this year for many reasons, but the biggest wave is about to come as the bonus tax reduction on deferred capital gains comes to an end on December 31,” Origin Co-CEO Michael Episcope said. “Unlike other private real estate firms that are still searching for attractive QOZ investment opportunities, we have $700 million worth of projects in our pipeline right now that represent some of the best development sites in the country.”
3 Benefits of QOZ Investing Though December 31, 2021
“Investments in QOZ offerings can be made after December 31 but will not meet the five-year hold requirement prior to December 31, 2026, which is necessary to receive the 10% reduction in their capital gains tax basis,” Origin General Counsel Michael McVickar explained.
Origins QOZ Fund Strategy Has Led to Top Performance
Origin Investments Announces Closing Of Inaugural Qoz Fund
Origin Investments, a real estate private equity firm headquartered in Chicago, announced the final closing of Origin Qualified Opportunity Zone Fund I, with aggregate capital commitments of $265 million from more than 800 investors. Origin projects that the $265 million raised will equate to more than $1 billion of multifamily development projects it will own and manage.
Given the combined demand for qualified opportunity zone investments and the success of its QOZ Fund, Origin is finalizing plans to launch a second QOZ Fund later this year.
There continues to be an incredible demand for investment funds focused on qualified opportunity zones, says Michael Episcope, Co-CEO, Origin Investments. At Origin, we remain hyper-focused to source opportunities across carefully selected target markets that meet our disciplined acquisition criteria and return requirements. Our investments stand on their own, based on the merit of the opportunity. The QOZ tax benefits represent an added benefit, not a rationale for investment.
Origins QOZ Fund I is a diversified private real estate fund with a strategy to acquire sites within qualified opportunities zones for the purpose of developing new, or significantly expanding existing multifamily projects across the U.S. Like its other investment activities, Origin primarily targets 14 fast-growing metropolitan areas throughout the U.S.
The five projects that currently comprise Origins QOZ Fund include:
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Origin Investments Launches $300 Million Multifamily Qualified Opportunity Zone Fund Ii
Origin already has an established pipeline of potential developments in South/Southeast
CHICAGO, October 20, 2021—-Top-performing private real estate manager Origin Investments, following the close of its highly successful inaugural Qualified Opportunity Zone Fund, launched a second QOZ Fund targeting $300 million in funds. Origins QOZ Fund II will invest in ground-up multifamily development in the fast-growing targeted U.S. markets and already has three ground-up developments undergoing due diligence before closing.
This press release features multimedia. View the full release here:
Key benefits of Origins QOZ Fund II include tax deferral, tax reduction and tax elimination.
“Theres been tremendous demand from the investment community and were launching QOZ Fund II, a virtual carbon copy of our first Fund, to create investment opportunities that provide tremendous returns along with substantial tax benefits for investors,” said Origin Investments Co-CEO Michael Episcope.
Origins QOZ Fund II will embrace the same structure and strategy as its first QOZ fund, which closed in August after raising $265 million and ranked in the top 2% of all QOZ funds nationally in terms of capital raised, according to , a professional services firm that tracks QOZ investment. Origins QOZ Fund Is 11 ground-up development projects are projected to have a construction value exceeding $767 million.
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Opportunity Zone Investing In Action
Lets take a look at a case study. Eight years ago, Julie purchased a small apartment building in her hometown. The property was priced right when she bought it, and over the years generated a nice healthy cash flow and to her pleasant surprise has nearly doubled in value.
Shes built up a lot of equity in the building and figures that now might be a good time to sell, when the market is so strong. But the problem is paying capital gains tax. Julie knows she can use a 1031 Exchange to defer capital gains but she is concerned about finding a like-kind replacement especially while multifamily cap rates are at historic lows.
Julie wants to stay invested in real estate, but hopefully in a less hands-on role than she has had with her previous apartments. She begins researching alternative real estate investments and discovers the Qualified Opportunity Zone program. The more she learns about opportunity zone investing, the more she likes what she sees.
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Origin Investments Review: Summary
With its sky-high investment minimums, Origin isnt designed for the casual investor.
But it does cater to more seasoned investors who understand the value of passive income through real estate.
Their track record shows over a decade of delivering strong returns which is not something many other crowdfunding platforms have. Origins has proven through both strong and weak real estate markets that their strategies deliver consistent returns to investors.
When you invest in Quality Opportunity Zone projects, you are part of a movement towards economic development for areas that need a boost. In return, you’ll reap the significant tax advantages that this investment opportunity offers, and potentially pay $0 in capital gains tax.
Since you will have access to your account info 24/7, you will see the funds progress continuously. You may want to reinvest your dividends to watch your investment grow.
Origin Investments Newly Launched Opportunity Zone Fund Lines Up $105 Million In 17 Hours
CHICAGO, Nov. 19, 2018 /PRNewswire/ Private equity real estate firm Origin Investments launched a Qualified Opportunity Zone fund on Nov. 14 and amassed $105 million in commitments from 425 investors in 17 hours. While other firms are raising blind capital for QOZ funds, Origin has three multifamily opportunity zone projects under contractone in Denver and two in Charlotte, cities that make the top 10 markets to watch in Urban Land Institutes 2019 Emerging Trends in Real Estate report.
QOZs, which were established in 2017s Tax Cuts and Jobs Act to incentivize long-term investment in economically distressed areas, allow investors to defer, significantly reduce or potentially eliminate capital gains taxes. In creating QOZs, the U.S. government hopes to motivate Americans to invest some of the $6.1 trillion in unrealized capital gains they are holding in exchange for tax advantages. U.S. Secretary of the Treasury Steven Mnuchin has suggested that as much as $100 billion could flow into opportunity zones.
But the QOZ tax benefit doesnt change the fundamentals of sound real estate investing. These projects need to pass the same scrutiny as developments in non-QOZ areas, and be able to produce viable, risk-adjusted returns, Origin cofounder Michael Episcope said. All opportunities should be evaluated on their strength as stand-alone investments and the ability of the manager to perform.
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How Does The Qualified Opportunity Zone Program Work
Rather than using taxpayer dollars to stimulate economic growth in these communities, the government decided to use private investments. To encourage private participation, individuals who invest in Qualified Opportunities Zones are eligible for tax incentives.
To capitalize on this program, a taxpayer must invest their proceeds from their sale of an asset into a Qualified Opportunity Zone Fund. This must happen within 180 days of the sale. However, while a taxpayer may invest the returns of the sale of an asset, as well as the potential gains, the tax incentive only applies to the capital gains.
Also noteworthy, investors can use the proceeds from any appreciated asset. Its not a requirement to invest with a like-kind asset to defer potential gains.
What Is A Qualified Opportunity Zone Investment Fund
The Tax Cuts and Jobs Act of 2017 created QOZs to provide potentially significant tax benefits to investors who re-invest capital gains into long-term investments into communities designated for economic development.
This solution is useful for accredited investors who have substantial capital gains, a desire to realize them in a tax-efficient manner, and a commitment to socially-impactful investments.
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Learn More About About Qoz Investing
The information on the website includes historic results of certain investments made by Origin however, past performance is no guarantee of future results. Historic returns may not reflect actual future performance, may not reflect potential deductions for fees which may reduce actual realized returns. Investors are advised that any investment with Origin may experience different results from those shown. Projected IRR and multiples are based upon the anticipated redemption or maturity date. All investments offered by Origin involve risk and may result in loss.
Some of the statements contained on the Origin website are forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. These statements involve known and unknown risks, uncertainties, and other factors that may cause an investments actual results, levels of activity, performance, or achievements to be materially and adversely different from those expressed or implied by these forward-looking statements. Forward-looking statements may be identified by terminology such as may, will, should, expects, plans, anticipates, believes, targeted, projected, underwritten, estimates, predicts, potential, or continue or the negative of these terms or other comparable terminology.
Some Opportunity Zone Benefits Are Set To Expire And Investors May Start Flooding In
A deadline is approaching for investors that want to pour capital gains into federal opportunity zones, and a rush could be on.
As of Jan, 1, investments into qualified opportunity zone funds wont receive the 10% reduction on deferred capital gains taxes that has been part of the program since it was created by the 2017 Tax Cuts and Jobs Act.
Those who act after Dec. 31 can still secure two other benefits from the program, which, according to its congressional sponsors, was meant to drive investment into neighborhoods historically starved for capital. Future investors can still defer their capital gains tax liability until Dec. 31, 2026, as well as eliminate taxes on any capital gains realized from an opportunity zone investment after 10 years.
Those two benefits are each more valuable to investors than the 10% reduction on deferred capital gains taxes that will sunset in less than four weeks, according to Origin Investments Co-CEO David Scherer. But the loss of that reduction is still causing a new rush of investors seeking to take advantage of opportunity zones.
Its a better idea to do this in December rather than in January because why not get the 10%? Scherer said.
The firm launched its second qualified opportunity zone fund in October. It has six multifamily assets in its pipeline, including projects in the Atlanta, Phoenix, Charlotte and Colorado Springs markets.
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