Within the world of 1031 exchange planning, many sponsors no longer use the Tenant in Common (TIC) structure. However, there are still some people who search for one of two types of TIC properties for a 1031 exchange (Securitized TIC or Real Estate TIC).
At 1031 Exchange Place, we can help connect you with a selection of properties for TIC 1031 exchanges. Here are some basics on these, and some of the benefits they may offer you.
A TIC investment refers to any real estate that is co-owned by multiple investors. TIC investments fall under like-kind rules of tax code section 1031 due to the fact that the taxpayer holds a deed to the property deemed tenant-in-common.
In many cases, TIC investments are best for regular exchangers who own rental properties but no longer wish to manage them. These investments general bring long-term leases and secure investments from large tenants.
TIC investments have low minimums – as low as $50,000 in most cases. This makes 1031 and cash buyers open to high-quality NN properties that might not have been available to people in this price range in the past – only larger investors would have been able to take advantage, but this is no longer the case.
Freedom from Day-to-Day Management
As we noted above, the TIC investment is often great for property owners who do not wish to manage their rental properties. NNN lease structures can be combined with third-party property management easily, allowing you as an investor to focus on other areas.
Reselling and Liquidity
If you’re a new TIC buyer, you don’t even have to qualify for a loan for this investment. There’s no debt already built against the property, which also means that reselling or liquidizing is far easier.
Many investors are easily able to purchase more than one TIC property at a time, what with investment minimums so low. This can help you diversify your exchange.
In most cases, TIC sponsors are real estate professionals with a long track record in the field. These professionals have a great personal interest in the businesses leasing their properties finding success – they want the real estate to appreciate, of course. As such, you’ll generally find fantastic locations within TIC investments.