Advantages of TIC Investing
No more management headaches leaves you time for doing what you want, without the worries of "termites, trash, and tenants". Because there will be professional management of these properties, you can invest anywhere in the country, diversifying your portfolio. If your area of expertise was multi-family, you are now free to invest in retail because the manager will handle the day to day management. Often the deal is on a long-term lease to a Credit Rated Tenant. Many times the Sponsor that structured the deal will have a considerable ownership stake in the property, and a strong equity position when the time comes to the resale the property. Management can be changed by a voted of the investors, and is usually reviewed on a regular basis.
Your investment in a TIC property potentially provides you with a check every month. Distributions are typically 50-100% tax sheltered thanks to a new depreciation schedule. You may do another 1031 out of your TIC deal and defer the depreciation and appreciation gains indefinitley.
TICs typically end up with a larger, higher-quality properties with greater stability than any other type of real estate investment. Stop looking for a needle in a haystack in your local market. Let the property fit your needs, not your needs trying to fit a certain property just because it is located "close enough to home" to manage.
Non-recourse debt means you cannot lose more money than you have invested, and you don't have to give a personal guaranty. Coupled with the fact that you can match exactly to the dollar what your 1031 exchange needs, you can see why TICs are so popular and have grown to over 6 billion dollars invested for 2006 according to Omni Brokerage, a TIC research firm.
The IRS ruled in 2002 Revenue Procedure 2002-22 that established that up to 35 investors could take TIC title in any one property and still qualify for 1031 exchange.
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