Benefits of Tenants-in-Common TIC investing for 1031 starker exchange

Tenant-in-Common (TIC) is a form of holding title to real property. It allows the owner/owners to own an undivided fractional interest in the entire property, you actually get a deed in hand representing the % of the property that you own.  This deed gives you same right as any other real estate, you can refinance it, sell it, or hold it.  TICs help an investor to go from a recourse loan to a non-recourse loan,  and TICs work great for estate planning.  The monthly income you receive is mostly tax sheltered, and best of all, you have daily no management responsibilities to worry about.    

Under this co-ownership structure, you will own an undivided fractional interest in an entire property and share in your portion of the net income, tax shelters, and growth. Further, you will receive a separate deed and title insurance for your percentage interest in the property and have the same rights as a single owner. Because TIC opportunities are often "packaged" with management and financing in place, TIC investments may offer efficiencies in the identification, acquisition, financing, closing, and operating stages of real estate ownership.  This makes them ideal for 1031 exchange because the "packaging" that has already taken place removes much of the time consuming process that can complicate a 1031 exchange and the 45/180 day rule.  Some people use TICs as a backup property in 1031 exchange, although it is becoming harder and harder to find a single tenant NNN deal that can beat TICs for ease of operation or return.    

Furthermore, fractional ownership provides you with the ability to diversify your 1031 Exchange into more than one property and to participate in potentially larger, institutional quality properties. Thus, small investors in one area of the country may participate in large industrial, commercial, and residential property investments all around the country with professional management.

TIC investments provide simplicity by eliminating active property management headaches. Individuals who are tired of the day-to-day burdens of being a landlord or who own land and would like an income producing property will appreciate the following benefits of a TIC investment:

    * Cash flow is generally paid monthly and is tax-sheltered via depreciation pass through and interest deductions. You may also share in the appreciation of the property when sold.
    * Minimum equity requirements as low as $100,000 allow you to invest in high quality, institutional grade properties. These low minimums also allow you to diversify, which can reduce your risk by allowing investments in different locations, with various property types, tenants, industries, etc.
    * National real estate companies that structure these TIC programs acquire (identify and locate, evaluate, arrange financing, etc.), manage (maintain, lease, collect rent, service mortgage), and sell the TIC properties. They have a vested interest in the performance of the property. These companies usually have strong track records extensive experience in various sectors, types, and locations of real estate.
    * TIC investments enable you to replace the required debt on the 1031 when needed. Accredited investors assume non-recourse (no personal guarantee) financing existing on the property. You can invest in properties that have no debt or in ones with up to 75% leverage.
    * TIC investments provide the flexibility to avoid the taxable boot if your preferred real estate doesn’t allow you to meet the full debt and equity requirements.

A ready inventory of TIC properties allows individuals to easily identify properties within the 45-day identification period, acquire within the 180 days, or have a "back-up" property in case their preferred real estate falls through 

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