We recently realized $350K in capital gain, and are looking at deferring the tax by creating a Qualified Opportunity Fund. Would the following scenario fulfill criteria for a QOF property: buying a single family home that is located in an OZ, and was previously used as primary residence, then turning the house into a rental? If yes, is it feasible to do this as an individual investor, with the guidance of a lawyer? Or is this too small of an amount?
All projects should have the guidance of qualified professionals, but what you've outlined is feasible. I would recommend consulting counsel in a secondary or tertiary market, where the overhead is lower and so too are the rates. The attorneys are often just as good, however.
The scenario described could work, depending on the answers to following questions: (i) is the home being purchased from an unrelated seller, (ii) will you make capital improvements to the house within 30 months that exceed the acquisition cost of the house (excluding any portion attributable to the land), and (iii) will you be providing services to the tenant, so that it is not simply being leased on a triple-net basis? The answers to all of these questions must be "yes." The legal structuring and documentation could be done for $4,000-6,000 (not including the real estate documents for the property acquisition).
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