Where Are The Zones Located?

Click To See a Map of Opportunity Zones in Austin

What Is An Opportunity Zone?

An Opportunity Zone is a tract of land designated by the federal government to incentivize economic development in distressed communities. The investment is incentivized by giving investors extremely attractive tax benefits. As a simplified explanation, you can roll over capital gains from a previous selling event (not necessarily real estate) within 180 days and defer taxes on those profits, similar to a 1031 Exchange. Additionally, you can receive a deduction of those capital gains equal to up to 10%. If that wasn't good enough, if you hold your investment in the opportunity zone for at least 10 years then you pay ZERO capital gains on your OZ profit when you exit.

Unsurprisingly, there are some contingencies to reap these rewards. First, in order to make an investment you can't do so directly. You have to invest through a registered Qualified Opportunity Fund, or QOZ. If you fill out the form below we can direct you to a lawyer who can file this for you. Secondly, you have to make an investment equal to the cost basis of the improved property. So if you were to buy a $1M property in an OZ through a QOF and the land value was worth $400k, then you'd have to invest an additional $600k into the business or real estate asset.

In January 2019, Bob sells his business for $3M and makes $2M in capital gains. Bob invests the entire $2M in capital gains into a QOF within 180 days of selling after returning from a trip to Turks and Caicos. In 2019 he pays no taxes on the $2M in capital gains instead of paying what would have been $400k (20%) in taxes. After 10 years the $2M he invested into the QOF is now worth $4M. So he exits the fund and pays the deferred $320k from 2019 (he saved $40k from the initial deduction in 2019), while paying zero capital gains tax on the $2M profit he made in the fund. Bob returns to Turks and Caicos to retire and buys a nice condo with his additional $440k in tax savings. This is a simplified example, but you can see that clearly these incentives can be very attractive.

What Are The Best Opportunity Zones in Austin?

Not all opportunity zones are created equal. Although the tax benefits can be very attractive, an opportunity zone cannot make a bad investment a good one. However, it can make a good investment a great one! Keep in mind that, even if you are not a developer or institutional investor looking to build, you can still indirectly benefit from this legislation by buying in or near an area that will inevitably be improved directly by developers. This is why it's important to work with a knowledgable local expert that has their finger on the pulse of the market.

Saint John's TOD Zone

The St. John's location is the most attractive option in my opinion for two main reasons:

It's great for urban infill due to its proximity to both Downtown Austin and the fast-growing Domain area. This means it's under 15 minutes to Apple, IBM, Samsung, Amazon, Google, Facebook, and the countless other companies that keep Austin's economic engine firing.
It's the only opportunity zone in Austin that is also zoned as a Transit Oriented Development. The City of Austin and Mayor Adler are pushing multimodal public transportation and density around these TOD Zones. You can think of it as similar to agglomeration around subway stations in global cities like London or New York. The City of Austin sees this transition to TOD zones as imperative if Austin is to become a global city.

Essentially the zoning in this area grants developers high density entitlements along roads like St. John's and Guadalupe, and allows for urban infill duplexes and ADUs (accessory dwelling units).

Parmer Lane/Pflugerville

This area is poised to grow quickly as Samsung lies in this zone (off of Samsung Blvd and Parmer) and there's plenty of raw land to build on. Buying anything off of Parmer should be a great long-term hold since the Apple Campus is also off of Parmer about 15 minutes from here. It's also worth noting that the 134 acre parcel that Apple Purchased lies on Robinson Ranch. The Robinson family still retains a 7000 acre parcel there and word on the street is that they are ready to start slowly developing it. It's also worth noting an upcoming 425 acre mixed-use project that lies in this development across from Samsung called East Village.

Manor

Manor is a small town outside of Austin that has largely been unaffected by the boom. Fun fact: It's also the location for the 1993 film "What's Eating Gilbert Grape" with Leonardo DiCaprio and Johnny Depp. Recently there have been new home communities going up nearby like Manor Commons, which are in the opportunity zone here. It's surprising that it has been largely unaffected since Applied Materials has a campus 5 minutes away. In order to attract these engineering families there have been charter schools created in the area.

It's also worth noting the recent proposal for an $800M facelift to Walter E Long Park nearby that will include a cultural arts center, kayak rentals, hiking trails, rentable cabins, a beach, amphitheater, PLANETARIUM, FERRIS WHEEL and MARINA. This proposed park would be 15 TIMES bigger than Zilker.

Another potential boon to Downtown Manor is a proposed Metro Rail Line with a station right in downtown Manor. You can see the proposal here. If this passes then Manor will EXPLODE and become an urban core in its own right.

Windsor Park

Windsor Park is located just North of Mueller, a large mixed-use development that is over a square mile and is already very established in Austin with 3 bedroom going for over $500k. The northern perimeter of this development is 51st street, where the opportunity zone begins. We expect properties in this zone to perform well in the coming years.

Springdale/Govalle

This region is set up well since it's some of the cheapest land in proximity to Downtown. There are many new construction builds going up in the area. I think this zone will perform well but it's already fairly expensive relative to rent

78741

78741 is the cheapest zip code with proximity to Downtown. It has experienced rapid growth since the advent of the Oracle Campus on Riverside Drive brough an influx of new apartment communities. The landscape of this area is about to be drastically changed by the aptly named Project Catalyst, a 97 acre mixed use community being developed by the Oracle Campus. There's much to be said about this location, but what I like most about it is Edgewick Condos - a gated community of townhomes 10 minutes to Downtown. This builder has 17 units left and is ready to sell! You can see a 3D virtual walk-through here.

78745

Let's be honest, this area was probably shouldn't be in an opportunity zone. Buying in Westgate, Sunset Valley or off S 1st is a home run. 'Nuff said.

Southeast Austin/Circuit of The Americas

Last but not least, we have the largest opportunity region by area, Southeast Austin. It's worth noting that Circuit of The Americas and much of the surrounding land is owned by Bobby Epstein, Steve Mnuchin, and others who helped create the opportunity zones! Hmmm..... It's also worth noting that there's another large mixed-use development going up in this area known as Velocity where HEB has already signed a lease as an anchor tenant. HEB is a large grocery store chain in Texas and has a proven track record of increasing property values. Although this was not mentioned in the original 5 OZs from the first email it's still has great potential. Zoho is building a campus nearby as well. And, of course, located in close proximity to this OZ is the new Tesla factory! Some communities:

Easton Park - This community is built for younger millennial families as an affordable option somewhat close to downtown. It has great amenities and is community-oriented. They regularly have community events like concerts so millennials can still feel cool with other millennial families and their kiddos. It has a price-to-rent ratio of 15 but I expect the rent to increase quickly as it becomes more of a household name in Austin due to its "cool factor".
Sunchase 50s - Standard cookie cutter Lennar community with an attractive ratio - pricing and floorplans attached
Stoney Ridge - Standard cookie cutter Lennar community with an attractive ratio - pricing and floorplans attached

Relevant Developments

Since most of the Opportunity Zones are located in East Austin, below you'll find a quick visual showing 8 major upcoming developments on the East Side. Collectively they will transform Austin and create value for many of the aforementioned Opportunity Zones. For a more in depth article on the developments, you can click the map to view our August 2020 update that highlights each of these projects.

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