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Although
there may not be a typical TIC investor, there are some characteristics that
many TIC Investors have in terms of investment objectives.
Those seeking deferral of capital gains and
recapture
This is the most obvious and most common reason 1031
Exchange investors look to TIC Investors. Investors are faced with essentially three choices when selling a property.
They can pay the capital gains, they
can do a 1031 Exchange into another single owner property, or they can do a 1031
Exchange into a Tenant-In-Common (TIC) property.
Those investors seeking freedom from
management duties
One of the attractive
aspects to many TIC investors is the ability to buy a replacement property with
professional management. Many times the real estate sponsor also serves as the
manager however even if this is not the case there is almost always a
management group selected who has worked with the sponsor on previous
properties. In addition these management groups have track records that are
either outlined or referenced in the PPM. The key is that TIC properties free
up investors from the day to day management and leave it in the hands of
competent professional groups.
Those investors seeking an opportunity to acquire institutional
quality properties
According to the National Association of Realtors, the vast majority of real estate investors are not
large professional real estate groups who spend millions of dollars on a single
project. Quite the contrary, most real estate investors invest in properties
under $2 million and therefore do not have the opportunity to invest in large,
institutional size properties such as high rise office buildings, multi family
apartments, or large retail centers. TIC properties gives those investors who
normally are shut out of investing in these large properties the opportunity to
purchase a fractional interest in one.
Those investors seeking to hire a professional real estate firm
with a professional acquisition team to find a suitable replacement property.
For those real estate investors who do not have the
time or resources to hire a professional or a team of professionals to find a
suitable replacement property, do the due diligence on that property, arrange
financing, get appraisals, negotiate the terms of sale, and present it in a PPM
then TIC Investments offer a solution to that problem. TIC sponsors do exactly
that and can replace the need to have these resources for individual investors.
Most TIC sponsors are professional real estate firms with acquisition teams
that use their experience and expertise to set up these real estate deals in a
prepackaged way.
Those investors who still want to enjoy the potential benefits of income
property ownership:
Ψ
Cash Flow
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Appreciation
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Tax Advantages
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