The TIC structure tapped into the pent up demand many real estate investors had for a number of years. The restrictive IRS timelines caused many investors such angst they literally sat on the sidelines with their properties and watched good markets and solid offers pass them by because the options of paying the taxes or finding another replacement property with a 1031 Exchange were unappealing. Since 2002 investors have found TIC investments popular for a variety of reasons. Here are a few:

• Institutional Properties – Many real estate investors have not had the opportunity to invest in large institutional trophy properties that larger institutional investors have enjoyed for years. These properties offer a whole new market to the average real estate investor and the opportunity to buy into these is a major reason TIC investments are so popular.

• Flexibility – One of the difficulties in completing a 1031 Exchange is matching the debt and equity portion of the exchange with another replacement property. Investors frequently found this aspect a problem because it limited the number of properties they could look at. Many times 1031 Exchange investors found themselves having to buy a larger replacement property which required additional monies, from their own pocket, to the new property transaction. Other times investors could only find a suitable replacement property that was less than the value of their exchanged property; which meant they were left with “boot” and required to pay some of the capital gains tax anyway.

With a TIC investment, investors are able to be flexible with their capital investment as long as they meet the minimum equity requirements; thus giving them a great deal of flexibility in these transactions.

• Faster Acquisition – An additional difficulty in doing a 1031 Exchange is the restrictive timelines the IRS gives investors. While 45 days to identify a property and 180 days to close may seem like reasonable periods of time, it often times is not.

One reason TIC offerings are so popular is that they are prepackaged offerings done, in many cases, by professional real estate groups with extensive experience. Each offering is required to have a thorough prospectus - giving extensive data on each deal. Investors can therefore avoid time consuming negotiations and focus on evaluating the properties and doing their due diligence.

Investors generally find investing in TIC investments a much faster process.