TIC Investments
TIC
Investment for Retirement | |
What
is a tenant in common investment? (Also
referred as tenancy in common, co ownership real estate,
tic property, tic replacement property, tic exchange,
tic option, 1031 tic option, 1031 solution)
Tenant-in-Common
Investments are fast becoming the ideal replacement
property of choice for many 1031 Investors seeking
to defer their capital gains taxes through the use
of a RC Section 1031 tax deferred exchange.
Tenant in Common (TIC) property ownership,
or a “1031 TIC property” structure allows the smaller
investor to own a undivided fractionalized interest
in a larger institutional quality type, professionally
managed, commercial property with other investors,
not as limited partners, but as individual owners. Each owner will receive their pro rata share of the cash flow income,
tax benefits, and appreciation of the entire property. In addition, a separate deed and title policy
is issued to each investor for their undivided percentage
interest in the property.
The TIC ownership option essentially offers
the same rights and benefits that you would receive
as a single investment property owner, but without
the management headaches. Each tic property asset is professionally managed
by some of the most experienced investment real estate
providers or tic “sponsors” in the industry.
It used to be that only large institutional
investors such as life companies, pension funds, real
estate investment trusts (REITS) and the like were
able to invest in the larger, well located, higher
quality credit tenant commercial property.
Now as a viable 1031 replacement property option
through a (tic) tenant in common exchange (See
IRS Rev.Proc 2002-22 for recent IRS guidelines),
the smaller individual investors have the ability
to invest in a diversified selection of institutional
quality investment property types including apartments,
office, industrial, multi and single tenant retail properties located throughout various geographic regions nationwide,
that they otherwise could not purchase individually.
Real
estate investors are learning that TIC replacement
property can provide many benefits of ownership unmatched
in conventional investment property.
TIC ownership can provide investors with a
steady stream of income, safety, and eliminate active
property management duties. No more fixing toilets,
trash, or dealing with bad tenants!
Who
should consider a Tenant in Common Investment?
·
Investors who are seeking to defer their capital gains
tax but don’t want to be a landlord anymore
·
Investors who are in their 45 day identification period
and are seeking a viable replacement property option
to satisfy their 1031 exchange or need a back up option
in case their primary property falls through.
·
Investors who have traded down and have excess proceeds
in their 1031 exchange and rather than pay the capital
gains tax, would like to replace it with more property
to receive 100% tax deferral
·
Investors who are seeking greater cash flow and appreciation
return potential than they are currently receiving
from their investment real estate
·
Investors who are retiring or seeking a life style
change and would like to take a
more passive role in their real estate and
consolidate their holdings
·
Investors who are seeking to diversify their real
estate portfolio into higher quality investment grade
real estate but lack the experience of managing or
acquiring larger institutional quality real estate
What
are the Benefits of (TIC) tenant in common Investments?
Tenancy
in common property has become increasingly popular
among 1031 exchange investors for the following reasons:
Management
Free Ownership - tic
property eliminates the day-to-day hassles of property
management, which allows more free time to do the
things that are important. Thats because all the details
of rent collection, leasing, maintenance and repairs
and book keeping issues are all handled by professional
property managers and the tenant in common sponsors
who possess the expertise in managing commercial real
estate.
Flexible/Simplicity -
It is often times difficult to find suitable replacement
property that makes financial sense and meets the
exact equity and debt requirements for your 1031 exchange.
Tenant in common property can be easily matched to
meet your debt and equity requirements and your individual
investment needs. It allows investors to enjoy a monthly stream
of income while not having to deal with the day to
day management duties any longer.
Minimum Investment Requirement -The typical tic investment property is valued between $10-70 Million,
which prices the average individual investor out of
the market. Now tic allows the individual investor
to purchase a portion of a larger institutional quality
commercial property with a minimum investment as little
as $50,000 with no maximum amount.
Higher Quality Property -
The
average investor can own a portion of institutional
grade commercial property that is occupied by regional,
national, and Fortune 500 credit companies. TIC Properties include apartment communities,
grocery and retail anchored shopping centers, office
and industrial complexes, and national and regional
single tenant properties.
Diversification - TIC
investments allow 1031 exchange investors to take
all or a portion of their exchange proceeds, and invest
it into one or more interests by different property
types geographic
markets, and real estate investment company sponsors.
This offers the investor more stability, diversification, and
reduces financial risk.
Higher Income and Growth Potential -
Tenant in common investors receive their
percentage of the net cash flow, depreciation,
and appreciation.
TIC’s can anticipate immediate monthly cash
flow income, which is partially tax sheltered from the depreciation
and other deductions from operation. TIC ‘s offer the same tax benefits as conventional
investment real estate only without the management
burden. In most cases, investors can earn higher
cash flow and appreciation from tenant in common ownership
in a higher valued quality property than they would
owning conventional real estate.
Pre Arranged Non Recourse Financing - Loans are already in place and have been secured through institutional
lenders by the real estate sponsor at very attractive
terms. Typical loans terms secured for tenants in
common property are fixed rate, non-recourse financing
that range from 5-10 years and are structured in accordance
with the property business plan.
Each TIC assumes their percentage of the existing
non-recourse loan, meaning the tenants in common do
not have any person liability.
Readily Available Property - There
are a variety of real estate sponsors that have a
steady and readily available inventory of tenant in
common properties which makes it an ideal 1031option
for investors who need to identify replacement property
within the 45 day identification period, need a back
up property in case their primary property fall through,
or have proceeds left over in their exchange that need
to be placed. This
solves the 1031 timing issue.
Defined Exit Strategy -
Each
tenant in common property typically has a holding
period between 4-7 years.
Investors benefit from some of the most experienced
real estate investment companies that are dedicated
to providing uncommon returns and have the discipline
to sell when investment objectives have been met,
thereby potentially maximizing your return on investment.
More Safety - Because
tic property is well-located, higher quality institutional
grade commercial property, these properties are typically
occupied on long term leases “on triple net” by national
and regional credit tenants who are financially strong.
This makes it a more longer term stable investment
than what an individual might be able to afford on
their own.
Estate
and Tax Planning Tool - Since the IRS issued Revenue Procedure 2002-22,
1031 exchange investors can now invest in tenant in
common investments and receive the same tax deferral
treatment under Section 1031. TIC investments can be a viable 1031 option
to build wealth as well as use it as vehicle for estate
planning purposes. By utilizing a tenant in common investment
as a 1031 replacement property, the taxpayer not only
is able to defer the capital gains tax on the appreciation
and depreciation recapture of their investment property,
but upon their death, their heirs receive a one time
step up in tax basis to the fair market value of their
tenant in common ownership.
Therefore, the entire capital gain tax is wiped
out , and can be an ideal solution for those who might
otherwise opt to sell and pay their tax.
Call Toll Free: (866)TIC-1031 or Email: danc@1031investmentsource.com today!
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