Available Qualified Opportunity Funds

Opportunity Funds are investment vehicles, which defer (and partially eliminate) the payment of capital gains tax until April 15, 2026.

Realtynet Advisors, Inc. has brought together an interdisciplinary team to consult with potential Opportunity Fund investors with respect to making understanding, evaluating, and investing in Opportunity Funds. Whether you are a seller of a business, stock or bond portfolio seeking to defer and partially eliminate capital gains tax, an impact investor such as a private foundation, private office, and philanthropic organization, let’s strategize together on ways to utilize the new vehicle in the fulfillment of your personal or organizational goals and mission.

As the Treasury releases guidance, rules and regulations concerning this new opportunity, there will be a proliferation of new Opportunity Funds on the market. Realtynet stands ready to help you navigate the many alternatives in finding suitable funds to meet your goals and objectives.

If you are thinking of forming your own Opportunity Fund, we can navigate and guide you through the process (see Fund Services). We want to give access to potential investors with viable alternatives, which invest in projects that not only have economic merit, but make a difference in the lives of the people and communities where capital is invested.

Other Opportunity Funds will be added as we work with real estate developers and others in establishing their own funds. Third party funds may be added in the future after a thorough due diligence and vetting process. Most real estate Opportunity Funds that come to the market will be single asset funds. Most real estate developer fund sponsors will set up a new fund with each new Opportunity Zone development project they do.

Impact Opportunity Fund, LLC

The Impact Opportunity Fund will consist of a diversified portfolio of debt-free, corporate-guaranteed, single-tenant, net-lease properties located throughout the United States. It is anticipated that over the next decade, millions of baby-boomers will sell their businesses or liquidate their stock and bond portfolio, and retire. This is why our emphasis is on preservation of principle and secure monthly income.

The market will soon be flooded with highly leveraged opportunity funds promising impressive rates of return. But, as a retiree, if your goal is security and steady cash flow, why take on the additional risks associated with owning highly leveraged real estate. Debt can be your best friend or worst enemy. If everything goes well, occupancies remain high and rents continue to climb, debt can increase your rate of return. But, if markets go south, vacancies increase, and mortgage rates climb, your equity could be at risk.

What is a net-lease property?
The public perception is that national chains, such as Walgreens, Dollar General, and O’Reilly Auto, own the buildings they occupy; but generally, this is not the case. Typically, they sign a long-term lease, which requires them to pay any and all operating expenses. Instead of the landlord, these corporate tenants pay the property tax, insurance, maintenance, repairs, upkeep, utilities, snow removal, and landscaping, etc. The gross rent is the same as your net rent!

With the Impact Opportunity Fund owning properties with a Fortune 500 companies as the tenant, you can experience greater peace of mind. Especially without be encumbered with long-term debt. It’s important to remember we have nothing to do with the operation of the business, but these national businesses are our tenants.

What kind of cash flow can I expect?
Because tax law requires opportunity funds to substantially improve the properties invested in the fund, it necessitates we purchase the land and build, rather than acquire an up and running establishment. Therefore, your quarterly income will begin and grow as the construction of each property is finished and our corporate tenants occupy their space. It is anticipated the annual income will be approximately 6% on the cash invested in the fund.

How risky is development?
For sure, developing a property entails greater risk than acquiring an existing property. But, these risks are mitigated by the type of property and the nature of the relationship between tenant and landlord. Unlike an apartment complex, a storage facility, office building, or strip center, which typically require locating and signing tenants after the fact, our projects will have a pre-signed lease in place before ground is broken. The national tenant will select the location for the store based on their demographic studies, the developer will build using the blue prints provided by the tenant, and the tenant will inspect the construction of the building. Why do this if they are not the owner? The quality of work and the physical condition of the premises reflects on them and their business, and they are on the hook for 10, 15, 20, or 25 years (depending on the lease length) for the maintenance, repairs, and upkeep. Shoddy workmanship will result in greater out-of-pocket expenses.

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Realtynet Investment Trust, LLC – A Cost-Basis Fund

Opportunity Funds are vehicles to defer (and partially eliminate) capital gains tax, but not a good place to invest the cost basis portion of your sale. Most Opportunity Funds will acquire and hold their properties for a minimum of 10 years in order to maximize the tax benefits. It could be counterproductive and even damaging for an Opportunity Fund to be forced to have a liquidity event in order to provides members with the cash to meet their tax liability.

The RealtyNet Investment Trust fund (”RNIT”) is meant to be a “companion” fund to Opportunity Funds. While the capital gains portion of your sale is invested in an Opportunity Fund, the tax basis portion may be invested in RNIT. The fund was organized with the specific purpose of investing in real estate while maintaining the highest level of liquidity. Our strategy is tailor-made for liquidity on or before deferred capital gains taxes are due in 2027.

It is anticipated the Fund will invest individually or alongside developers, affiliates, and other co-investors to acquire real properties, with the intent to immediately liquidate such property at a premium; sold as undivided ownership interests to investors seeking replacement property in a 1031 exchange. The initial focus will be on acquiring corporate guaranteed, single-tenant, net-leased properties, with the intent of reselling the Property to multiple buyers of tenant-in-common (“TIC”) ownership interests.

For example, if an AutoZone is acquired for $1,500,000 at a 6.50% cap rate (the ratio of net operating income to property value) and sold at a 5.50% cap rate, the premium (or markup) would be 18.2%. The intent is to buy and sell (“flip”) TIC properties at a pace of one per quarter. However, the rate at witch flips will be made is not guaranteed.

Approximately 70% of those involved in a 1031 exchange are baby-boomers or older. Typically, in this stage of life, exchangors seek preservation of principal, and secure monthly income with absolutely no management responsivities or operating expenses. The problem is, approximately 40%-45% of 1031 exchanges involve less than $250,000, which is insufficient to acquire a passive replacement property. Net lease real estate usually begins in the $1.5 million cost range.

The ability to acquire a tenant-in-common ownership interest in a net lease property with a minimum investment of $100,000 allows exchangors to satisfy their desire for passive income. If a TIC property is priced at $2 million and an exchangor has $200,000, he/she may own 10% of the property and receive 10% of the monthly rent, direct deposited into their checking account.

The Realtynet Investment Trust, LLC provides for exchangors and non-accredited investors to participate in institutional-type real estate with minimal investment dollars, while providing our investors with potentially significant returns, and liquidity to meet the deadline for the taxes owed on the sale of capital assets.

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Impact Opportunity Fund II, LLC – Future Fund

This is a RealtyNet sponsored fund. The Impact Opportunity Fund intends on being a diversified fund, primarily investing in real estate Opportunity Zone projects located in Utah. We will work with, and in many cases co-invest alongside with, real estate developers, other funds, foundations and philanthropic organizations.

Starting with a 32-unit student housing complex adjacent to Snow Collage in Ephraim Utah, we anticipate investing in multi-family housing, self-storage facilities, single family residential, single-tenant net lease properties (such as Dollar General and O-Reilly Auto), hospitality, and healthcare.

The focus of the Fund is preservation of principal, secure monthly income and appreciation potential. Properties will be acquired and developed utilizing debt, but it is our intent to pay off the debt and have a diversified portfolio of debt-free or low-leveraged properties.

Many of our clients will be baby-boomers seeking secure retirement income following the sale of their business or stock and bond portfolio. An emphasis will be placed on developing income generating properties.

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