What is Tenants-in-Common?
Tenant-in-Common (TIC) is a type
of ownership in which investors receive undivided fractional interest in larger
properties, similar to DSTs, but with fewer limitations attached to the
property. Accredited investors who want potential appreciation through an
add-on asset, not caring about current income and diversification, should
invest in TIC properties. The minimum investment for TIC 1031 Exchange Properties starts as low as
$1M.
How Does It Work?
Many real estate agencies
structures and help investors do a 1031 exchange into TIC properties. These
properties are viewed as top-ups that can either substantially enhance the
condition of property following an acquisition, redevelop the asset, or work
through renegotiating leases. No more than 35 investors are allowed in a TIC
agreement. Generally, TIC properties differ from one another in terms of
property type and investment strategy of the real estate agency handling the
TIC.
Benefits of Tenants-in-Common
By investing in TIC properties,
investors get an opportunity to invest their 1031 exchange proceeds for
acquiring a fractional interest in bigger properties. TIC 1031 Exchange Properties
may require big investment but are surely worth considering for investors
eyeing a shorter investment period, refinance opportunities, and greater
appreciation.
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