Introduction to TICs - The Perfect Guide For Newcomers
Just when you thought you had a complete handle on real estate, somebody asks your opinion on TIC markets.
Now you, the self-proclaimed 'real estate wiz', are standing dumbfounded as you have no knowledge about this wonderful new concept.
Allow me to help you avoid any more embarrassments in the future by giving you an introduction to this amazing new craze.
So let's begin our discussion with what TICs basically are.
The Webster's Dictionary defines a Tenant In Common as 'one holding real or personal property in common with others having distinct but undivided interests'.
In simpler language, TICs, or Tenancy In Common, Cotenancy, or Fractional Ownership, is a way that allows multiple owners to maintain sole ownership in a commercial property without having to opt for traditional methods such as limited partnerships or formation of an entity.
So basically you, as one of the owners, maintain all the rights to a said property that a single owner would normally have, even though you property's ownership stretches beyond you to other people.
Now, I'm pretty sure you must be asking yourself how this is possible.
A valid question no doubt, but one with a straightforward answer as the application of TICs is as simple as its concept.
Basically, you, as one of the owners, own an exclusive fractional interest in the property, while you are also simultaneously entitled to an exclusive portion in the net income and tax shelters.
Moreover, you are also able to obtain a separate deed and title insurance for your portion of interest in the property.
Pretty neat huh? Thus, you have all the rights any single real estate owner would have while maintaining a property which has numerous owners.
So what kind of benefits are you looking at once you go for a TIC arrangement.
Well, truth be told, the possibilities are endless, and the advantages are multifold for both buyers and sellers.
Considering the case of buyers first, TICs allow you, as a buyer, to get your hands on a property which otherwise would have been out of reach.
By allowing you to combine your resources with other investors, TICs make possible the purchase of properties which would have been too expensive to purchase with your own resources...
and all this while giving you all the rights of a sole owner.
The best part is that it doesn't end just there.
As a buyer, TICs also provide various tax write-offs and the opportunity for substantial due diligence.
Meanwhile, for a seller, TICs make life a lot easier by leading to higher sale prices and increased marketing options.
This is so because with a TIC arrangement, sellers can sell fractions of their property to multiple buyers for prices that generally add up to more than the amount the seller would receive if he/she were selling the whole property to just one buyer.
Hence, TIC arrangements not only benefit buyers, but sellers as well.
Additionally, the quite recent introduction of 'fractional loans' has meant that co-owners can greatly reduce the risks and hazards of co-ownership by maintaining their own individual mortgages.
Hence, once all's been said and done, it's no surprise to see that Tenancy In Common has picked up so much in such a short span of time.
In today's world where the prices of everything seem to be going up perpetually while our currency seems to be taking a bigger hit with each passing day, all savvy investors have seen that TICs are the best possible way of making it big in what is usually a dog-eat-dog business.
Now you, the self-proclaimed 'real estate wiz', are standing dumbfounded as you have no knowledge about this wonderful new concept.
Allow me to help you avoid any more embarrassments in the future by giving you an introduction to this amazing new craze.
So let's begin our discussion with what TICs basically are.
The Webster's Dictionary defines a Tenant In Common as 'one holding real or personal property in common with others having distinct but undivided interests'.
In simpler language, TICs, or Tenancy In Common, Cotenancy, or Fractional Ownership, is a way that allows multiple owners to maintain sole ownership in a commercial property without having to opt for traditional methods such as limited partnerships or formation of an entity.
So basically you, as one of the owners, maintain all the rights to a said property that a single owner would normally have, even though you property's ownership stretches beyond you to other people.
Now, I'm pretty sure you must be asking yourself how this is possible.
A valid question no doubt, but one with a straightforward answer as the application of TICs is as simple as its concept.
Basically, you, as one of the owners, own an exclusive fractional interest in the property, while you are also simultaneously entitled to an exclusive portion in the net income and tax shelters.
Moreover, you are also able to obtain a separate deed and title insurance for your portion of interest in the property.
Pretty neat huh? Thus, you have all the rights any single real estate owner would have while maintaining a property which has numerous owners.
So what kind of benefits are you looking at once you go for a TIC arrangement.
Well, truth be told, the possibilities are endless, and the advantages are multifold for both buyers and sellers.
Considering the case of buyers first, TICs allow you, as a buyer, to get your hands on a property which otherwise would have been out of reach.
By allowing you to combine your resources with other investors, TICs make possible the purchase of properties which would have been too expensive to purchase with your own resources...
and all this while giving you all the rights of a sole owner.
The best part is that it doesn't end just there.
As a buyer, TICs also provide various tax write-offs and the opportunity for substantial due diligence.
Meanwhile, for a seller, TICs make life a lot easier by leading to higher sale prices and increased marketing options.
This is so because with a TIC arrangement, sellers can sell fractions of their property to multiple buyers for prices that generally add up to more than the amount the seller would receive if he/she were selling the whole property to just one buyer.
Hence, TIC arrangements not only benefit buyers, but sellers as well.
Additionally, the quite recent introduction of 'fractional loans' has meant that co-owners can greatly reduce the risks and hazards of co-ownership by maintaining their own individual mortgages.
Hence, once all's been said and done, it's no surprise to see that Tenancy In Common has picked up so much in such a short span of time.
In today's world where the prices of everything seem to be going up perpetually while our currency seems to be taking a bigger hit with each passing day, all savvy investors have seen that TICs are the best possible way of making it big in what is usually a dog-eat-dog business.