ADVISOR
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Colorado Financial Advisor
Tenants In Common
Colorado Financial Advisor Tenants In Common
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Colorado Springs
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A new and innovative approach to real estate investing has appeared in recent years. An alternative to sole ownership of real estate (as a landlord) is an investment in a single large commercial property by multiple owners, not as limited partners or as a shareholder in an entity such as a REIT (Real Estate Investment Trust), but as individual owners. Each owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. This form of ownership is known as co-tenancy or tenants-in-common ("TIC"). Each owner has the same rights as would a single owner. For qualified investors, we can help you locate and analyze TIC properties where you can acquire partial ownership of a quality multi-million dollar commercial property with a low minimum investment. A TIC Replacement Property enables the average investor to participate in a class of investment grade real estate previously reserved for large institutional investors. TIC Replacement Properties are chosen because they provide credit-worthy tenants, secure monthly income, stability, and growth potential. Investing in a TIC Replacement Property provides passive long-term income, eliminates active property management and alleviates the burden of being a landlord. Now the average person can own property leased to a Fortune 500 company, a national or regional retailer or the government. Advantages of TIC Ownership
It is estimated that 50% of all 1031 exchanges involve capital amounts of $250,000 or less. The price of admission to the triple-net commercial lease market typically begins at $1,000,000, locking out 50% of 1031 investors. TIC ownership is available with as little as $50,000. In a typical 1031 exchange, the taxpayer will identify three potential replacement properties and subsequently purchase only one. TIC ownership makes it economically feasible to identify and acquire ownership interest in three properties instead of one, thereby decreasing risk through diversification. Partial ownership of several different types of properties in several different locations can bring greater stability to future income, much as diversification in stocks minimizes risk to investors. You can diversify across residential, office, retail and industrial properties. Stock market investors can diversify some funds into real estate. Concern over terrorist attacks is another reason to diversify real estate holdings across different locations and property types. By identifying a TIC Property as one of the replacement property choices, the taxpayer's entire proceeds can be applied to the TIC property if the other choices fall through, or the taxpayer can invest the "spill-over" money in the TIC property if there is money left unspent after another closing. Because an investment position in a TIC property can be reserved for a period of time after the identification period, the potential for paying capital gains tax because of a collapsed deal is decreased. In addition, reinvesting all 1031 proceeds into TIC properties creates the opportunity to identify as many as 6-10 properties instead of the customary 3 during the 45-day period, putting the investor in a much more secure position for the exchange. Typically, TIC properties already have non-recourse financing in place and can be assumed without qualification or loan assumption fees. Some properties have no debt. By eliminating the loan qualification process, credit checks and appraisal work, and because the negotiation process is eliminated, a TIC property closing can easily take place during the 45-day identification period, thereby eliminating the risk of running out of time. A TIC closing can take place within days of identification. Splitting the proceeds from a 1031 exchange into several TIC properties can present the opportunity for greater liquidity of assets for future cash or investment needs. If there is a debt carryover into the exchange, all the debt can often be moved into one replacement property, leaving remaining funds free for a couple other debt-free properties. In addition, many TIC properties have buy-back provisions from the seller and can provide selling opportunities to other TIC owners of the property. A TIC investor receives a monthly check without having to bother with the day-to-day management of their investment. A property manager provides management services. Some TIC choices include:
If you are a qualified investor, we can assist you in locating, analyzing and
purchasing TIC properties
that suit your needs, from a licensed brokerage firm. As a financial advisor, we can offer
advice on how TIC property would fit into your overall financial situation. Due to potential acts of terrorism, we also recommend giving preference to "hard targets" with tighter security and limited access over "soft targets" with little security and easy public access. Diversification by buying properties in several different cities or states is suggested to lower your geographic risk due to local economic problems, poor property performance, storm and flood damage and terrorist acts. Call us at (719) 591-0433 or Toll-Free at (888) 758-9654 or click here for a Free Consultation on this exciting new investment vehicle!
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presented here is intended for informational purposes only and is not a
solicitation to invest.