Why are TIC properties a good investment?

by | May 14, 2014 | Business

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logoA TIC ownership (Tenants In Common) is a way for two or more people to own real estate and to have a fractional undivided interest in the asset. The shares of the ownership are not required to be equal and can be inherited. Every co-owner holds an individual deed when they invest in TIC Properties. This type of property investment allows any person the ability to own an institutional type property without large risk or a big investment. The TIC has many features that make it suitable for buyers who want to invest in real estate.

First, where most commercial building investments start at one million dollars, TIC Properties can be purchased for a fraction of that price. The investment provides a reliable income stream and offers the individual the opportunity to grow their investment. These types of properties attract tenants who have greater stability than those that regular tenancy situations do. Each TIC owner contributes their real estate knowledge to the combined group and the combined TIC ownership can be comprised of many individuals who have decades of experience with real estate investing.

Owners in a TIC do not have to take on the task of dealing with tenants. Instead, the tenants are dealt with through a single management company and the investors simply collect their rental income each month. TIC Properties allow investors to purchase any amount they wish as long as they match the minimum buy in. If you had net sale proceeds of $175,000.00, you would be able to invest that $175,000.00 as equity in a TIC property. Minimum purchase requirements must meet Revenue Procedure 2002-22 as issued by the IRS allows as many as 35 TIC owners in a single property.

Mortgages that cover a TIC property are non-recourse financed meaning that debt financing can be assumed. The individual assuming the mortgage does not need to qualify for the mortgage or to pay loan assumption fees. Since the minimum buy-ins for these properties are quite low, a buyer can invest in several properties in a variety of marketplaces. Another good perk to investing in a TIC is that there are no closing costs which can be quite expensive.

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