1031 Exchanges with TIC Properties

For decades, fractional ownership of real estate in the US has had two primary classifications. These are real estate and securitized tenant in commons. Now that more and more people are buying into the present day promising real estate markets, these tenant-in-commons are also fast becoming an area that property investors are considering. Add to that you can use TIC properties for your 1031 exchange, and it makes them the golden egg for most investors.

Know Your TIC Sponsor

Property and tax securities professionals are among the most knowledgeable persons on matters TICs and 1031 exchanges. So, find one to guide you through how well you can use your tenant in commons to keep all the equity from your investment. However, when choosing your TIC sponsor, be keen to note the years of experience they have had operating in this niche. Typically, TIC sponsors that have been in this 1031 exchange business for many years have a large selection of TICs from which to choose.

Understanding TICs

Real estate investors shaking handsTenant-in-commons are investments in real estates that you co-own with other property investors. Many refer to this as crowdsourcing real estate units. So, as a co-owner, you also hold a title deed to this property. Therefore, you qualify to appeal for tax exchanges for another property that you could be owning. If you are very busy to manage all your rental investments, TICs arrangements can be the one solution for you. All you have to is to keep a predictable monthly rental income. TICs for 1031 exchange can also work for long-term lease and secure property investments, and large tenants. If you are unsure of how much TICs can be of help to you, consult your TIC sponsor.

Why Opt for TICs?

First off, you get access to higher grade investments. It is quite obvious that, unless you are a large real estate investor, you hardly have the resources for triple-net (NNN) property investments. But, thanks to these tenant in commons, crowdsourcing resources with other investors allows you access even to these institutional-grade and high-quality NNN investments. However, you have to be a cash buyer and qualify for 1031 tax exchanges. In this case, it is these higher-grade investments that will act as the replacement property when applying for your 1031 exchange.

Also, you can bank on your TIC sponsor’s experience and lease structure for third-party management of your investment property. That will free you up to focus on finding the next real estate bubble to invest in. Besides, your TIC sponsor’s extensive market analysis and in-depth demographic research will ensure that the value of every TIC property you invest in is highly likely to appreciate.

TIC structures are not as simple as you may suppose. You will require the help of an experienced deferred exchange service provider to determine how well you can use TIC properties for your 1031 exchange. Also, working with an established TIC sponsor guarantee that you are using a fail-proof structure, which they have used over time. But still, inquire to know the magnitude and value of the results that they have yielded from using the structure in facilitating 1031 exchanges.

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