Opportunity Zones 2.0 for appraisers

“Real Estate Investment and Opportunity Zones 2.0,” at the Appraisal Institute’s 17th Annual North Texas Realty Conference, MetroTex, Irving, Texas. An hour with appraisers and brokers.

What I told them:

• Being inside a zone is not enough. A fully leased building that resells generally will not qualify. A building bought before it is finished often will. Ask which path the buyer is using before you ask anything else.
• Your land and building allocation should not change because it is an OZ deal. Its consequences do. The building basis sets how much the buyer has to spend to meet the improvement test.
• A buyer who qualifies can accept a lower pre-tax return and still hit the same after-tax target. Whether the seller captures any of that depends on competition. It only shows up in the price if the OZ buyer is the one setting it.
• If you adjust for it, you need evidence: competing bids, what the buyer and broker tell you, market-supported modeling. Sometimes the right answer is no adjustment.
• Comp selection has a clock now. Texas nominated 605 tracts on September 4. They are nominated, not final, until Treasury certifies them. The new map starts January 1, 2027 and the old one runs through 2028. Two identical buildings on opposite sides of a line can trade differently, and buyers may react before the databases catch up.

And the one I say every time: the benefits don’t save a bad deal and suddenly make it good.