Aspire Investments - Tenants in Common

A popular choice among real estate investors seeking replacement property for their 1031 tax deferred exchange is Tenant in Common ownership (TIC), also known as fractional ownership. Under this structure, investors own an undivided fractional interest in an entire property and share in the net income, tax shelters, and appreciation proportionate to their investment. Further, investors receive a separate deed and title insurance for their percentage interest in the property. Because TIC opportunities are often "packaged" with management and financing in place, TICs offer efficiencies in the identification, acquisition, financing, closing, and operating stages of real estate ownership.

Some of the key features of TICs include:

Distributions, if any, are generally paid monthly and are tax-sheltered via depreciation pass through and interest deductions. Investors may also share in the appreciation, if any, of the property when sold.
Minimum equity requirements allow investors access to high quality, institutional grade properties. This may be the only option for small investors to acquire ownership in these types of properties. Investors may be able to diversify, which can reduce 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.
TICs enable investors to replace the required debt on the 1031 when needed. Investors assume non-recourse (no personal guarantee) financing on the property.
TICs provide the flexibility to avoid the taxable boot if an investor’s preferred real estate doesn't allow them to meet the full debt and equity requirements.
TICs can be a great option for investors who have excess equity from large exchanges.
TICs are Regulation D securities, and are restricted to accredited investors only (individuals must have a net worth of at least $1,000,000 or annual income of $200,000 for each of the last 2 years, with expectations of similar income in the current year).
As with any investment in real estate, there are risks associated with TIC ownership, including fluctuations in the real estate market that will impact the value of the property, vacancy rates which can decrease cash flow and risks associated with the loss of a major tenant.
There are additional costs and expenses associated with TIC ownership which are set forth in the PPM.
There is a certain loss of control associated with TIC ownership given that unanimous approval is required to take a major action, such as a re-finance or sale.
There is no known secondary market for TIC interests and therefore the investment is considered illiquid.

For more information, please visit our Contact Us page, or call us any time at 877-313-1031.