How can AI be used to determine OZs with richer investment potential?
That's a non-tax question. I'm not familiar with AI nor algorithms. I suspect the best determination of ROI is through a detailed study of pro forma produced, due diligence in underwriting and working with effective management teams. I'm bullish on residential, less so on commercial realty. Operating businesses would need to be successful to generate ROI and that is more challenged in a COVID 19 environment. Tech should do well.
You'll need the data first. There are a couple of aggregators out there. Once you have the data, I'm sure well-designed AI could sift through it.
Regarding how artificial intelligence (AI) be used to determine OZs with richer investment potential, this issue has generated interesting prospects of late. Former AirBNB executive Stefan Schimenes founded InvestReal last month with a mission to create the first data-driven real estate marketplace for Opportunity Zones, using AI to support investment decisions with data from numerous sources. InvestReal connects Opportunity Zones investors with real estate developers. Their data platform allows its users to utilize advanced analytics and data to analyze Opportunity Zones throughout the country using 88 key indicators. Moreover, a recent whitepaper from Skyline AI, an artificial intelligence investment manager for commercial real estate, "The Map is Not the Territory: Discerning the True Opportunity Within Opportunity Zones," found considering the AI alternative data sources rather than traditional census data delivers clearer views of tracts' potential opportunity. Several the tracts became more well-heeled over time, with most experiencing up to a 20% surge in household income. From 2014 to 2017, 4,981 tracts scored higher median household incomes, while only 1,977 suffered lower incomes. The states showing the greatest decline: Louisiana, New Mexico, and Nevada. A handful of New York City and Washington D.C. tracts gave evidence of large anomalies including areas that showed both high household income levels and unexplained poverty ratios.
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