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Category Archives: TIC Basics

Is a Self-Storage TIC the Right Investment for You?

Whether you are new to the world of real estate investing or are a seasoned veteran, the idea of a high return, low involvement investment opportunity is always difficult to ignore. And much of the time, these seemingly impossible investments are just that – smoke and mirrors. But not all. If you are searching for a low risk opportunity with reasonable returns and no management headaches, the world of Self-Storage Tenancies in Common might be ideal for you. Imagine a real estate investment opportunity that gives you: Insulation from the fickle nature of single-tenant properties. With hundreds (and even thousands) of tenants within a self-storage facility, it would take a […]

The Tragic Tale of TIC’s Fall from Grace

Tenancies in Common were once the golden child of real estate investment. However, the financial crisis of 2008 led to the collapse of the sector, at least according to this recent article. What started off as a great opportunity for investors to defer capital gains and trade-up to larger, more lucrative properties, became more of an albatross as underwater properties and warring co-investors caused these once-favorite investments to fall from grace. Then along came Delaware Statutory Trusts (DST) to fill the void left by the collapsing TIC market. And the securitized 1031 industry regained the strength it once had with TICs. In fact, securitized 1031 deals exceeded $1 billion in […]

Comparing DSTs to TICs In A 1031 Exchange

When it comes to investing in real estate, many savvy investors understand the benefits of fractional or co-ownership arrangements. Less day-to-day management responsibilities, bigger and better investment properties become available to them, and they can diversify their investment portfolios beyond traditional single-owner properties. But when an investor is ready to make the leap from single-ownership property to either a Tenancy In Common (TIC) or Delaware Statutory Trust (DST), the investor may be confused with the differences between the two. Here is a quick side-by-side comparison to clear things up. DST Structure TIC Structure IRS Reference Rev. Ruling 2004-86 Rev. Procedure 2002-22 # of Investors 499 max. 35 max. Ownership interest […]

What is Securitized Real Estate?

For the non-professional investor, a phrase like “securitized real estate” may not be a familiar concept. However, it pays to learn about this type of investment, as it offers a unique set of benefits not found elsewhere. Securitized real estate is simply real estate that is packaged and sold as a security. As such, it is regulated by federal securities legislation which promotes fuller disclosure and provides more suitable investments. Traditional real estate investments have proven popular with investors because these type of investments provide straightforward tax advantages, regular monthly income, potential equity appreciation and portfolio diversification. Yet, these benefits are often offset by concerns that with real estate comes […]

The Rationale of Revenue Procedure 2002-22

Section 1031 of the Internal Revenue Service Code is one of the most generous, widely available provisions of the code, carving out an exception to the general rule that all gain or loss from the sale or disposition of property must be recognized. However, to ensure the veracity of a proposed 1031 exchange, investors often want to ensure their transaction falls within the “safe harbor” provisions of the code. One of the grey areas for quite some time was whether Tenancy in Common (TIC) ownership qualified for 1031 benefits. What caused this potential confusion? TICs are often likened to partnership interests, and partnership interests are specifically excluded from 1031 exchange […]

Why Consider a DST or TIC For Your Next 1031 Exchange?

Many of my clients are individual investors, buying and selling real estate to grow their investment portfolios. One common question I hear from these clients is “how do I grow my investments faster?” They are concerned that the amount they have to invest on their own is simply not enough to achieve the long-term growth they desire. One option I often suggest is fractional or co-ownership in the form of a Delaware Statutory Trust (DST) or Tenancy In Common (TIC). Quite simply, this type of joint ownership allows an individual investor to acquire a larger and hopefully more profitable real estate asset than what they could have purchased with only […]

Risks Of Tenancy In Common

Although very popular, Tenancy In Common ownership presents a unique set of challenges that any investor should thoroughly consider beforehand. Beyond the typical risks associated with investing in real estate, when ownership involves multiple investors there is always the risk of conflict or disagreement among the owner pool. Any major decision requires the unanimous approval of all owners, which can be problematic if fast decisions are required. While most TICs contain a buy-out provision for dissenting owners, it is usually not a fast or easy process. The time it takes to resolve disagreements among owners can often cause the TIC to miss out on lucrative selling opportunities. Likewise, if the […]

Benefits Of A Tenancy In Common

One of the advantage of Tenancy In Common ownership of investment property is that the individual investors each maintain the ability to have a say in the day-to-day operation of the property, including when and under what terms to eventually sell the investment. Contrast this to Delaware Statutory Trust ownership where individual investors cede this authority to a third-party. Also, since buyers are able to pool their resources in a TIC, this gives the TIC collective much more buying power than an individual investor may have. This opens up a wider selection of potential investment properties, with greater growth potential. Finally, in cases where the TIC is offered as a […]

What Is Tenancy In Common?

Tenancy In Common (TIC) is a way for two or more individuals to have an undivided fractional ownership interest in a single property. With a TIC, each owner has individual rights and obligations related to the property. These rights equal the proportionate share of the owner’s interest. Having an ownership interest in a TIC gives an investor the right to his or her proportionate share of net income, tax benefits and appreciation. The TIC owner is treated similarly to a fee simple owner and receives an individual property deed and title insurance for his or her share of the property. A TIC owner may bequeath his or her interest to […]