In part one of this two-part blog series, we went over some of the basics of TIC investments and their benefits as TIC 1031 exchanges. As it turns out, the list of benefits is so long that we needed to extend it to this space.
TIC, or tenancy-in-common investments, refer to real estate that is co-owned by multiple investors. Here are some more potential financial benefits to using this kind of exchange.
Tax Returns and Depreciation
Just like with other forms of real estate ownership, depreciation is something that can be claimed against income on a tax return. Sheltering income is another benefit to investing in real estate over other investment options.
On the flip side, if your property appreciates while you own it, you’ll receive your share on a pro rata basis if the property is eventually sold. This kind of appreciation contributes to the overall ROI you can expect for your real estate investment.
With TIC investments, the tenant corporation involved in your purchase will guarantee lease payments to property owners throughout the lease. With no hassle or inconvenience, these funds are simply deposited into your bank account via direct-deposit on a monthly basis. Rents are pre-negotiated and disclosed in the lease – providing 10-15 years of predictable income.
Limited Fees and Expenses
In most cases, TIC investments and properties will come with almost no fees or expenses. Closing costs are generally not included, and you can get a prorated rent check sent to you on the same day you sign your agreement. There are also major savings typically offered through limiting appraisals and other basic investment costs.
Convenience and Availability
Our 1031 Exchange Place advisors can put you in front of TIC inventory options. For this reason, TICs are incredibly convenient to acquire – some investors use them as a backup replacement property option in case they have their first choices fall through.
In addition, TIC investments that fall under the Real Estate category – rather than securitized TICs or DST investments – are available to everyone. Those other types are generally restricted only to accredited investors, but that’s not an issue in this case.