A year after the Investing in Opportunity Act was passed, the industry it created is now hitting full stride: Opportunity Zone Funds all over the country have opened for business and begun accepting investment. However, 2019 will be a true test of the nascent program. Will Opportunity Zones succeed in their objective of directing much-needed capital to distressed areas? Will the program lead to meaningful social impact? Moreover, how will “meaningful social impact” even be measured?
Veterans Investing is a new Opportunity Fund, created by U.S. Marine Corps veteran Chris Fontaine and former law enforcement officer Dave Sillaman, which stands out from the crowd for a couple reasons. First, where most OZ Funds are investing (or planning to invest) in large-scale commercial real estate projects, Veterans Investing has kept their focus firmly on residential properties. And, more significantly, they’ve tapped a deserving and often underappreciated demographic to help them identify worthwhile investments: disabled veterans.
“This Fund has a back-end educational platform built into it,” explains Sillaman. “We’re teaching disabled veterans, who may not otherwise have good employment opportunities, how to identify solid residential real estate investments in Opportunity Zones.” In turn, the veterans become scouts for the Fund — they identify potential deals, and Veterans Investing handles the due diligence and underwriting. “In this way,” Sillaman says, “they’re able to make a living, where otherwise they may have had a hard time.”
The project began, Fontaine explains, with three friends of his who were injured in combat in Iraq and returned missing appendages. “Two of them are in wheelchairs,” he says. “The challenges of reentering the civilian workforce, just from a mobility standpoint, go without saying.” At that point, Fontaine had already left the military and begun his own real estate career, building his company from the ground up. He saw a chance to help his friends do the same. “I realized that 80% of what I do is with a smartphone and a laptop,” he says. “Why couldn’t they make a living for themselves the same way?”
This was all prior to the advent of the Opportunity Zones program. When Fontaine first heard about OZ, he knew it would be a perfect complement to his educational project. “It’s a total win-win for everyone involved,” he says with excitement. “These disabled veterans get a new skill and a path to solid employment; the Opportunity Zones get badly needed investment into their residential real estate sectors — including low-cost housing — and, backed by the due diligence and experience of our core management team, investors into the fund get a healthy ROI.”
Importantly, Fontaine notes, the program has no cost to the veterans themselves. “We don’t ask for a nickel from them,” he says. “There are a lot of paid educational resources out there for veterans, but that isn’t us.”
Currently, Veterans Investing is working with a pilot group of just over 100 veterans, but its founders foresee this figure growing rapidly. “In the next 12 months, we hope to expand to working with about 1000 veterans,” Sillaman says. “Five years down the road, maybe it’s 10,000 veterans we’ve worked with, whose lives we’ve helped. That’s a huge social impact for them — not to mention the construction jobs created and the community improvements made.”
Veterans Investing’s first major investment agreement, on the order of a projected $50 million, was made in December with Cottage Home Communities, a Florida-based firm working to develop 500 live/work/play communities in 500 Opportunity Zones nationwide. Cottage Home Communities envisions that each community will contain approximately 50 homes as well as local farming for fish, fruit and vegetables, which will create employment opportunities for residents.
“Our agreement with Cottage Home Communities is a hand-in-glove fit,” Sillaman says. “They, like us, are driven by the underlying mission of positive social impact that the Opportunity Zones tax incentives were designed around.”
What will 2019 bring for the Opportunity Zones industry? More growth, to be sure — and more challenges. At NES Financial, we believe the success of the OZ program hinges on exactly this: its ability to meaningfully improve the communities it touches. We’re proud to be partnering with Veterans Investing and others like them, providing the utmost in security, transparency and compliance to OZ Funds that are doing things the right way.
Nothing contained herein is presumed to be an offer. For more information, visit VeteransInvesting.com — or you may contact Christopher Fontaine directly at 301-538-2582.
For more information about Cottage Home Communities, visit CottageHomeCommunities.org.
For information about NES Financial’s Opportunity Zone Fund Administration Suite, please visit our Opportunity Zone Resource Center — or feel free to contact us at 1-800-339-1031.