TIC Investments in 2020
Are you looking for TIC Properties? This is the place.
You may have heard of, or are considering, Tenant-In-Common (TIC) investments; you have participated in a 1031 exchange. Taking an undivided portion of ownership in a tenant-in-common investment is called a tenant-in-common investment. As an alternative to sole right, a tenant in typical investment involves multiple owners investing in a single commercial property, not as limited partners or as an entity, but as individuals. Members will receive an undivided fractional interest, tax shelters, and growth.
Because they are flexible, easy to purchase (remember those 1031 deadlines? ) and have low investment minimums, TICs are an excellent solution for investors and 1031 exchangers aiming for diversification. With over 15 years of experience in the TIC industry, 1031 Exchange Place helps exchangers choose from a wide range of tenant-in-common properties.
Since the status of TIC arrangements with the IRS was unclear for a long time, some 1031 exchange investors were reluctant to invest in TIC properties. Did the TIC arrangement involve an investment in real estate (as required for a 1031 exchange), security, or partnership? According to Revenue Procedure (Rev Proc) 2002-22, the answer depends on the type of TIC investment. The IRS outlined the conditions under which it would consider purchasing a real estate TIC interest. Tenancy in common is defined by Rev Proc 2002-22 as each owner owning an undivided part of a parcel of land. Tenants in common have the right to receive a proportionate share of rents and profits from the property, as well as the right to transfer their interest. Since Rev Proc 2002-22 clarified TICs in March 2002, their popularity has grown. The next step is to review what made TIC investments so famous.
For what it was/is, TIC appealed to me.
Institutional Grade Real Estate for Less
The popularity of TICs is no surprise since exchangers seek properties with cash flow. There are several significant benefits, including the following:
- Investors who are not accredited can participate
- Affordability of “institutional quality grade” properties; national tenants and long-term rental agreements
- You won’t have to deal with management hassles or hassles.
- Cash flow generally improved
- Depending on the property selected, tax sheltering ranges from 50 to 70%
- According to market conditions and property type, appreciation may occur
- A low investment requirement (starting at $25,000)
- The low minimum investment allows for diversification
- It is possible to obtain low-cost, assumable financing, which is fixed rate and often non-recourse to investors.
- Replacement properties can be located and closed promptly due to their “off-the-shelf” nature
- In-depth due diligence by real estate company/sponsor and lender on each TIC investment property
Looking for TIC Investments?
We’ve worked with TICs since they were first introduced to 1031 exchanges and our advisors would love to help.
In 2020, what will happen? Is there a TIC option for me?
There was a boom in the TIC industry from 2003-2007, with billions of 1031 dollars invested in TIC properties. In the aftermath of the 2008 real estate recession, however, you may have found that they are harder to find. There was virtually no 1031 business post-crash, indicating that the Tenants-In-Common format was not viable. After the real estate market recovered and the number of 1031 exchanges increased, most of the earlier companies that had put together the TIC deals turned to other formats of investment – Delaware Statutory Trusts (DSTs). As a result of DSTs, financing long-term contracts is more accessible, which is one of the primary reasons. Several companies are still selling TIC properties (available to non-accredited investors), so please feel free to reach out if you’re interested in accessing TIC properties currently being sold.
Wherever you are in your 1031 process, our advisors are here to help – no spam and no strings attached.