Summary: Do you want to know the basics about Tenant in Common Investment Properties? Listen to our Podcast, watch the video or read the transcript below. Tenants in Common Basics - Podcast Subscribe to our iTunes 1031 Exchange Podcast Tenant In Common (TIC) Investment Properties Welcome to the 1031 Alternatives Group podcast on Tenant In Common (TIC) Investment Properties A Tenant In Common (TIC) investment represents co-ownership of real estate by two or more investors and is a form of holding title to real property. TICs permit small to mid-size investors the ability to own an undivided fractional interest in large, institutional- quality properties, such as office buildings, medical office, shopping centers and apartment complexes. TIC investors are on the deed and considered a direct owner of the underlying real estate. However, each Tenant In Common (TIC) investor or co-owner is not involved in the day-to-day management of the property. Each TIC investor enjoys his or her “pro rata” share of the net income, tax shelters, appreciation, and share of the proceeds at the property’s resale. Tenant In Common (TIC) properties are passive income vehicles that typically provide a monthly cash flow to investors. These are not partnerships and TIC investors have voting power on key decisions. Even though a large amount of equity has been placed into Tenant In Common (TIC) investments to date, in various ways TICs have been an unknown investment option to many investors. Many of the earlier investors resided on the West Coast of the United States, but more and more investors across the country are becoming aware of the potential benefits TICs have to offer. The most powerful reason TICs have grown in popularity can be attributed to a 2002 Internal Revenue Service (IRS) Revenue Procedure ruling. This ruling (Rev. Proc. 2002-22), essentially set forth the guidelines whereby a TIC would be recognized as real estate, not as a partnership. Hence, it could be used in a 1031 tax-deferred exchange. TICs have become the preferred investment vehicle for real property investors who wish to defer capital gains and depreciation recapture taxes via a 1031 exchange and own real property without the management headaches. Potential Benefits of Tenant in Common Investments: Defer 100% of capital gains tax Defer depreciation recapture tax Relief from property management headaches Upgrade to potentially institutional quality real estate Potentially increase current income & capital appreciation Diversify real estate investment holdings by asset class Identify quality replacement property solutions during the stringent 45-day window Geographically diversify real estate holdings Non-recourse financing in place to meet 1031 leverage requirements Cash flow from properties may be partially sheltered by new depreciation schedule. Risks of Tenant in Common Investments: As with any investment in real estate, there are risks associated with TIC ownership, including fluctuations in the real estate market that may impact the value of the property. The following risks may also be associated with investment: illiquidity, economic risks due to vacancy rates, default if unable to pay mortgage and possible loss of principal. TIC ownership requires unanimous approval to take major action, such as a re-finance or sale. Obtaining unanimity may be difficult when 10 or 20 investors are involved. It is not possible to address all relevant risk factors in this forum. Risk factors are outlined in the Private Placement Memorandum for each offering. Investors should thoroughly understand all risk factors and discuss them with their financial representative prior to investing in a 1031/TIC offering. With proper planning and by working with an experienced industry professional well versed in the niche field of 1031 exchange tenant in common investments an investor has the ability to develop a well-diversified, less-management intensive real estate portfolio, and is able accomplish these o
