Houses for a dollar. Millions (perhaps billions) in tax incentives. Reclaiming contaminated land. Partnering with Walmart to build town centers. What do all of these things have in common? They are examples of exciting redevelopment opportunities in different parts of America.
HUD Dollar Homes
The U.S. Department of Housing and Urban Development (HUD) offers homes for $1. Local governments may purchase them if they listed for sale without finding a buyer for six months. HUD acquired these homes through foreclosures.
The local governments purchase the homes for $1 so that they can fix them up and then re-sell them to low- to moderate-income families as part of a neighborhood revitalization program.
For investors and home buyers, there are also many bargain-priced HUD homes for sale, which need rehabilitation. First-responders and teachers get a 50% discount. Non-profits get a 30% discount.
Tax incentives attract investments by businesses in economically-disadvantaged areas. Federal, state, and local programs encourage redevelopment in many areas. Tax abatements come from the state, county, and the local community.
In 2018, the U.S. Treasury Department created Opportunity Zones in many states to give preferential tax treatment for investments made in these zones. Investors in these zones can defer federal income tax on capital gains. Under the new tax code, investments in Opportunity Zones held for 10 years have zero capital gains tax.
Super Fund Site Reuse
The Environmental Protection Agency (EPA) has a Superfund Redevelopment Initiative (SRI) to clean up toxic sites and reclaim contaminated land. There are now quite a few Superfund sites that went through the cleanup process and have EPA approval for reuse. Some successful projects under the SRI program include large solar energy collection arrays built on reclaimed land.
Walmart Parking Lots To Become Town Centers
Walmart plans to partner with developers to build Walmart Town Centers on underutilized acreage that surrounds some of its Walmart Super Centers.
Walmart invites small businesses and local communities to work with them on these redevelopment projects. Some plans include dog parks, day care centers, health clinics, farmer’s markets, basketball courts, and green spaces for picnics.
Sounds a bit like what downtown Main Street used to offer before Walmart came to town. Doesn’t it? Now, with these new redevelopment plans, the community space of a town center is coming back to some American towns.
Opportunities in redevelopment received support on a national level by the JOBS Act and the recent changes in the tax code. There are many redevelopment success stories happening in places where before everyone only saw problems and now real estate investors and developers find opportunities.
Whether you are in the market for a single family residence or a commercial investment, be sure to consult with your trusted mortgage professional to discuss financing options.