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Tenants In Common Replacement Property for Investors and Property Owners
Tenants In Common Concept - also, please visit www.1031fec.com
A new and innovative approach to real estate investing has appeared in recent years. An alternative to sole ownership of real estate is an investment in a single large commercial property by multiple owners, not as limited partners or as an entity, but as individual owners. Each owner receives an individual deed at closing for his or her undivided fractional 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.
replacement property enables the average investor to participate in an echelon
of 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
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 United States Government. See
below for the many benefits of TIC ownership.
Recently, the Internal Revenue Service issued guidelines concerning 1031 exchanges and tenants-in-common agreements or undivided fractional interest in real property. For information visit www.1031fec.com , E-mail your request, or phone 888.618.9681.
Advantages of Tenants In Common (TIC)
An estimated 40% of all 1031 exchanges involve capital amounts of $250,000 or less. The price of admission into the triple-net lease market typically begins at $1,000,000, thereby locking many 1031 investors out of this arena. However, TIC ownership is available for 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 many properties instead of one, thereby decreasing risk through diversification.
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. In addition, if there is money left unspent after another closing, the taxpayer can invest the "spill-over" money in the TIC property.
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.
Typically, TIC properties already have non-recourse financing in place and can be assumed without qualification or loan assumption fees.
A TIC closing can take place within days of identification by eliminating the negotiation process, the loan qualification process, credit checks, and appraisal work.
By maintaining a secondary market of TIC ownership interest, new investors can select seasoned properties, and existing owners can liquidate their partial ownership interest.
A TIC investor receives a monthly check without having to bother with the day-to-day management of their investment.
TIC properties attract tenants with greater financial strength and stability than might be possible for the individual landlord.
The tenants-in-common industry is rapidly growing due to the demand from 1031 buyer's who seek to acquire replacement property that generates passive income. Demand is also coming from investors leaving the volatile stock market and low yielding fixed income investments. Many TIC 'sponsors' have emerged to provide buyers with suitable investment and replacement property alternatives.
Most custodians for IRA accounts do not allow direct ownership of real estate or mortgages as an investment alternative. Most likely, you will need to do a tax-free trustee-to-trustee transfer of your IRA to a self-directed IRA account. Even if you think you have a self-directed IRA you probably don't! Your self-direction is almost certainly limited to investments the sponsoring custodian offers.
Self-direction of retirement plan investments means that you decide on the investments you wish to make in your retirement plan. Truly self-directed plans permit you to direct the trustee or custodian of your IRA or Keogh plan to make any investment permitted by law. In a self-directed retirement plan, you can allocate your funds between stocks, bonds, certificates of deposit, mutual funds, annuities, and real estate--all in one account. To receive information on self-directed retirement plans, please call or E-mail your request.
For more information, please E-mail or call 800.333.0801
Kenneth Wheeler DBA
Financial Exchange Coterie
Florida International Trade Center
5564 Marquesas Circle
Sarasota, FL 34237-8116
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One's property of value inevitably transfers ownership, with or without one's
Prepare now to save your family wealth.
2001-2018 Financial Exchange All rights reserved
April 22, 2018
FEC Web Consultants
One's property of value inevitably transfers ownership, with or without one's wishes.
Prepare now to save your family wealth. Ken Wheeler
Copyright © 2001-2018 Financial Exchange All rights reserved
April 22, 2018