🏗️ QOZ SELF-DIRECTED DEAL ANALYSIS

Chicago Qualified Opportunity Zone
Commercial New Build Model

Bronzeville · Pullman · Woodlawn  |  New Construction Only  |  Original Use Auto-Qualified

🎯 All-Commercial Portfolio · NNN Leases
✅ New Build = QOZ Original Use Rule — Zero Renovation Risk
⚡ Why New Builds for QOZ? The Original Use Rule — Cleanest Path to Compliance
New construction automatically satisfies the QOZ "original use" test — no substantial improvement calculation, no renovation budget risk, no compliance gray areas. Plus commercial NNN leases shift expenses to tenants, maximizing net cash flow.
$450k
QOF Equity
7.5%
Loan Rate
25yr
Loan Term
3.0%
Commercial Rent Growth
3.5%
Annual Appreciation
7%
Vacancy Rate
NNN
Lease Type
New Build
QOZ Method
🥇 Deal 1 — Best Overall Returns
Bronzeville Mixed-Use Retail + Office
📍 S King Dr / S Cottage Grove Ave, Bronzeville, Chicago IL  |  Cook County QOZ
✅ QOZ Designated 🏗️ New Construction 🏢 Commercial 5,500 sq ft
—
Yr 1 Cash Flow
8.8%
Cap Rate
—
Yr 10 Value
Build Cost & Financing
Land Acquisition$200,000
Construction (5,500 sq ft)$900,000
Total All-In Cost$1,100,000
Your Equity (QOF)$450,000
Loan Amount$650,000
Monthly Payment (25yr @7.5%)−$4,793/mo
Year 1 Income (NNN Leases)
Ground Retail: 3,000 sqft × $28/sqft$84,000
Office: 2,500 sqft × $22/sqft$55,000
Vacancy (7%)−$9,730
Effective Gross Income$129,270
Year 1 Owner Expenses (Tenant Pays CAM/Taxes)
Property Taxes (commercial new build)−$15,000
Building Insurance−$6,000
Property Management (5%)−$6,464
CapEx Reserve (2%)−$2,785
Misc / Legal / Accounting−$2,000
NOI (Before Debt)$97,021
Debt Service (annual)−$57,516
🟢 Net Cash Flow (Yr 1)$39,505
Cash-on-Cash Return
$39,505 ÷ $450k equity8.8% CoC
🏛️ QOZ Tax Benefit — New Build Edition
Original $450k gain — deferred untilDec 31, 2026 tax filing
QOZ compliance method✅ New construction — original use (auto)
Substantial improvement test✅ N/A — skipped entirely
10-yr appreciation tax$0 Federal + $0 Illinois
Est. tax saved (10yr appreciation)~$80,000–$130,000
10-Year Projection
Year Gross Rent NOI Debt Svc Cash Flow Prop Value Equity
10-Year Total Cash Flow
🥈 Deal 2 — Highest Cap Rate / Best NOI Yield
Pullman Industrial Flex / Last-Mile
📍 S Cottage Grove / E 103rd St, Pullman, Chicago IL  |  Cook County QOZ
✅ QOZ Designated 🏗️ New Construction 🏭 Industrial 10,000 sq ft
—
Yr 1 Cash Flow
8.3%
Cap Rate
—
Yr 10 Value
Build Cost & Financing
Land Acquisition$150,000
Construction (10,000 sq ft industrial)$800,000
Total All-In Cost$950,000
Your Equity (QOF)$450,000
Loan Amount$500,000
Monthly Payment (25yr @7.5%)−$3,691/mo
Year 1 Income (NNN Leases)
Industrial/Flex: 10,000 sqft × $11/sqft$110,000
Vacancy (5%)−$5,500
Effective Gross Income$104,500
Year 1 Owner Expenses (NNN — Tenant Pays Most)
Property Taxes−$12,000
Building Insurance−$7,000
Property Management (3%)−$3,135
CapEx Reserve (1% — industrial)−$1,100
Misc / Legal−$2,000
NOI (Before Debt)$79,265
Debt Service (annual)−$44,292
🟢 Net Cash Flow (Yr 1)$34,973
Cash-on-Cash Return
$34,973 ÷ $450k equity7.8% CoC
🏛️ QOZ Tax Benefit — New Build Edition
Original $450k gain — deferred untilDec 31, 2026 tax filing
QOZ compliance method✅ New construction — original use (auto)
Substantial improvement test✅ N/A — skipped entirely
10-yr appreciation tax$0 Federal + $0 Illinois
Est. tax saved (10yr appreciation)~$55,000–$100,000
10-Year Projection
Year Gross Rent NOI Debt Svc Cash Flow Prop Value Equity
10-Year Total Cash Flow
🥉 Deal 3 — Best Long-Term Appreciation / Obama Effect
Woodlawn Medical / Professional Office
📍 E 63rd St Corridor, Woodlawn, Chicago IL  |  Cook County QOZ  |  Obama Center 1mi
✅ QOZ Designated 🏗️ New Construction 🏥 Medical Office 6,000 sq ft
—
Yr 1 Cash Flow
7.9%
Cap Rate
—
Yr 10 Value
Build Cost & Financing
Land Acquisition$250,000
Medical Build-Out (6,000 sq ft)$1,100,000
Total All-In Cost$1,350,000
Your Equity (QOF)$450,000
Loan Amount$900,000
Monthly Payment (25yr @7.5%)−$6,638/mo
Year 1 Income (NNN Leases)
Medical Office: 6,000 sqft × $26/sqft$156,000
Vacancy (7%)−$10,920
Effective Gross Income$145,080
Year 1 Owner Expenses (NNN — Tenant Covers CAM)
Property Taxes (medical commercial)−$18,000
Building Insurance−$8,500
Property Management (4%)−$5,803
CapEx Reserve (2%)−$3,120
Misc / Legal / Accounting−$3,000
NOI (Before Debt)$106,657
Debt Service (annual)−$79,656
🟢 Net Cash Flow (Yr 1)$27,001
Cash-on-Cash Return
$27,001 ÷ $450k equity6.0% CoC — grows as Obama Center builds
🏛️ QOZ Tax Benefit — New Build Edition
Original $450k gain — deferred untilDec 31, 2026 tax filing
QOZ compliance method✅ New construction — original use (auto)
Substantial improvement test✅ N/A — skipped entirely
10-yr appreciation tax$0 Federal + $0 Illinois
Est. tax saved (10yr appreciation)~$90,000–$150,000
10-Year Projection
Year Gross Rent NOI Debt Svc Cash Flow Prop Value Equity
10-Year Total Cash Flow

📋 Why Commercial New Builds for QOZ?

✅ Original Use = Auto-Qualify
New construction automatically satisfies QOZ's "original use" requirement. No renovation math, no IRS scrutiny on the substantial improvement calculation.
💰 NNN Leases = Net Cash Flow
Commercial tenants pay taxes, insurance, and maintenance in NNN deals. You keep the NOI. No landlord surprise expenses eating your margin.
📈 Longer Lease Terms
Commercial leases run 5–10 years with annual rent bumps built in. Predictable, growing income vs. residential's year-to-year uncertainty.
🏗️ Build-to-Suit Optionality
Lock in an anchor tenant before breaking ground. Pre-leased new builds can be financed with better LTV ratios and lower cap rate risk.
🏙️ OBBBA 2025 Tailwind
The One Big Beautiful Bill Act (2025) extended and enhanced QOZ incentives, including 30% basis step-up for certain investments and rolling zone designations.
🤝 Chicago Invest South/West
City's $750M Invest South/West initiative targets South Side commercial corridors — aligning with these exact QOZ zones for infrastructure and tenant incentives.

📊 10-Year Comparison Summary

Deal Type All-In Cost Yr 1 Cash Flow 10-Yr Total CF Yr 10 Value Yr 10 Equity Tax-Free Gain Verdict
🥇 Bronzeville Mixed-Use Retail + Office $1,100,000 $39,505 $0 tax on gains Best CoC
🥈 Pullman Industrial Industrial / Flex $950,000 $34,973 $0 tax on gains Lowest Risk
🥉 Woodlawn Medical Medical Office $1,350,000 $27,001 $0 tax on gains Most Upside
⚠️ This model uses market-rate estimates based on Chicago South Side commercial real estate data (Q1 2026). All figures assume NNN leases, new construction original-use QOZ compliance, and market-rate rents for each asset class. Actual results vary. Verify QOZ census tract designation before purchase. Consult a CPA and real estate attorney. Not investment advice. QOZ deferral deadline subject to IRS guidance updates.