TICs can seem quite complex to the newcomer to the game, but once you get the hang of them they are really pretty simple. There are a few steps in particular that are important in the TIC process, one being the TIC: closing and pre-closing documentation step.

The TIC: closing and pre-closing documentation step is basically the step immediately preceding the very last step, which means it is the second to last step before the deal is closed and before you finalize your property purchase.

What is a TIC?

The first step is to understand what a TIC actually is. A TIC is a form of holding title to real estate, and allows the owner or owners of the property to own an undivided interest in the entire property. TICs are one of the most preferred investment vehicles today for real property investors who want to gain as much as possible and put themselves at the least amount of risk.

Benefits

There are many benefits that are offered by a TIC, including that cash flow is generally paid monthly and is tax sheltered, that national real estate companies that structure these TIC programs acquire, manage and sell the TIC properties and that they provide the flexibility that is needed to avoid the taxable boot.

TIC: Closing and Pre-Closing Documentation

You will first need to get yourself a real estate broker, who will help you through the PPM documentation and who will prepare the TIC: closing and pre-closing documentation for you. They will also assist you in listing, marketing, and selling your relinquished properties in order to free up your trapped equity and help you to acquire more profitable properties.

The TIC: closing and pre-closing documentation may take a while to complete for a couple of reasons. For one, they are going to want to make sure that they do not miss anything as this could end up having serious repercussions.

You really want to make sure that everything is properly in place and never rush through with something like this. Every detail needs to be in place, checked and double checked in order to make sure that everything is ready to go through.

There are many benefits that you can receive from a TIC, and it is definitely an investment that is worth checking into, especially if you are interested in purchasing real estate of any sort and making as large of an investment as possible.

Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC properties nationwide.

A TIC investment is an investment that allows the average owner of appreciated real estate to sell their property to a third property and exchange into an undivided interest in an institutional quality asset. TIC investment replacement properties enable the average investor to participate prominently in the real estate market and potentially receive great profit as a result.

As with any investment, it is important that you be aware of the different risks that are possible with a TIC investment. The TIC: closing risk is one of the most common and detrimental risks that an investor can experience, and is therefore one of the most important to be educated on.

TIC: Closing Risk

There are a few issues surrounding TIC: closing risk that should be understood. For one, TICs are complex investments and so they are not suitable for all investors. Just because someone you know may have a TIC investment and it is working well for them, this certainly does not mean that it will be as rewarding for you.

There is also the fact that even if an investor qualifies as accredited then this investment may not be suitable based on the persons risk tolerance and as well on their investment time horizon. The TICs also come with very unique fees and expenses, which is just something else that you will want to consider.

It is very important to understand risk such as the TIC: closing risk when you are making an investment and also to assess your own risk because every investor’s risk is different. The economic risks are often the most dangerous with a TIC investment, and these are the risks that are associated with economic timing.

It is here where you need to assess the extent to which the economy is growing or accelerating its pace of growth or the reverse, and then decide whether or not it is a wise time for you to make this investment. There is also the extreme market risk that investors must be concerned with, and this involves valuation, technical conditions, economic issues, as well as sentiment.

Keep in mind that too much risk can be ameliorated by doing things such as raising cash and reallocating to lower betas.

You can and should discuss all of this with a qualified tax consultant, who will be able to work together with you, explain all of the technical information and details to you, including the TIC: closing risk, and help you and your investor partners to decide whether this is going to be a wise investment for you to make.

Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC properties nationwide.

There is a lot of valuable information to learn about TICs, but TIC: due diligence on the property is by far one of the most important of all. Performing the TIC: due diligence on the property or investment is not only recommended but necessary.

Before you go through with any TIC investment it is imperative that you review the TIC: due diligence on the property completed and do any of your own studies.

Advantages

As long as you go through effectively with TIC: due diligence on the property, a TIC holds many potential advantages. It is a fantastic vehicle for purchasing high quality international-grade properties, and one of the most major benefits is that the investors are not liable for risks.

Tax Benefits and Profits

There are some fantastic tax benefits that you can receive and other ways that you can profit from investing with a TIC. Cash flow from rental income is one of the most significant ways that this investment returns profits, because as with a stock that pays dividends, a properly selected and managed rental property will also provide you with a steady stream of income.

Another benefit is that the investor has a lot more control over the risks when they go with a TIC over any other real estate investment.

There is also the fact that as you pay down your mortgage, the increase in equity in your investment can be used for other purposes and investments. A real estate investor is also able to take out equity loans if the terms are right and then take these loans and use them for more investing or for other purposes.

If you are interested in learning more about TIC: due diligence on the property and related issues, a good idea would be to speak to a tax consultant, who will be able to work together with you and educate you on what is involved here. They will also assess your present financial situation and help you determine whether or not going with a TIC is going to be a smart financial move for you at that point in your life.

The potential benefits are definitely worth it in most cases, including the opportunity to invest in larger, institutional grade properties and diversify your investment property portfolio. Your tax consultant will be able to discuss all of this with you and make you more clearer on the issues at hand.

Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC properties nationwide.

Many investors are now delving into the idea of going into a joint venture on real estate acquisitions to maximize profits with the minimum financial investments. The idea of tenancy in common (TIC) is to pool financial reserves together with your partners to purchase or acquire multiple properties to maximize profits and capital gains

The prospect of a risk-free business associated with TIC is quite appealing to different individuals who plan to go into the real estate business. The sharing of expenses and other contribution depending on the percentage share of each member of your party will allow you minimize any financial risk, while getting the best possible profits from your multiple investments.

But individuals who are into the tenancy in common method will be subjected to the 1031 Internal Revenue Code which is all about the capital gain tax in which each co-owner is subjected to. To solve this problem and to educate the different individuals in the business, the Federation of Exchange Accommodators was created.

What is Federation of Exchange Accommodators?

If you are into TIC, then it is only normal to get know about Federation of Exchange Accommodators (FEA). The company is the only national trade association created to represent professional businessmen or investors in like-kind exchanges under 1031 Internal Revenue Code (IRC).

The 1031 IRC allows different investors to defer taxes on various capital gains during the life of the real estate venture. A tax-deferred exchange is where an owner of a property of one or more relinquished real estate assets while deferring payment of federal income taxes and others during its transactions. The Federation of Exchange Accommodators will offer the services of professional accommodators for the job.

Accommodators are professionals under the Federation of Exchange Accommodators (FEA) which handles and facilitates 1031 exchange transactions between different companies or individuals. The main services provided by these individuals include coordination between exchangers and their advisors, preparation of documentation for different transactions like Relinquishment of Rights and Replacement Property, and so on.

The main function of the Federation of Exchange Accommodators (FEA) is targeted unto member companies registered under its wings. The federation provides resources, tools and legislative information to different business individuals to further the functionality of their business venture. It also aims to educate different consumers on using the 1031 IRC exchanges to defer the capital gain tax of their assorted properties.

Also, the Federation of Exchange Accommodators (FEA) are composed of professionals, linked with the main directive of the company geared towards its members such as lawyers, realtors, Certified Public Accountants (CPA), TIC brokers and lenders, escrow agents, and different financial institutions.

Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC properties nationwide.

If you are considering purchasing a property with additional investors, upfront you need to know more about TIC: fees and loads in a TIC deal. Fractional interest ownership in property is a growing trend as more people see real property as a solid investment for retirement. The most predictable and profitable properties generally will have multiple investors to share the burden, and profits. If you are looking to invest in property with a group, you should be as informed about TIC: Fees and Loads in a TIC Deal as you can because these fees will directly affect your bottom line.

TIC: Fees and Loads in a TIC Deal as They Apply to You

The most important thing to remember about TIC: fees and loads in a TIC deal is that these fees and loads are paid upfront at the time of closing. In general, before closing, all the fees and loads are reviewed and presented with an impact statement as to their affect on profits and taxes. Make sure that, before you invest, your fees and loads will not outweigh the profit you hope to make off the property in the long term. Short term you will take a hit paying these fees and loads, but they should not be so high as to affect your overall investment.

TIC: Fees and Loads in a TIC Deal, How Are They Calculated?

For the most part, these upfront fees are how the property sponsor makes a large portion of their money. They acquire the property, then sell it to you, the investor, and collect the fees and loads as their profit. These markups can vary and are figured based on how much the sponsor has put into preparing the property for investment. For the most part, TIC: Fees and Loads in a TIC Deal should hover around ten percent of the overall investment. These fees can be accumulated from due diligence costs, securities fees, commissions, financing expenses, and other charges. The load can increase the cost of a property significantly and you the investor have to be acutely aware of what percentage the TIC: Fees and Loads in a TIC Deal are.

Understanding where they come from and how they are derived will go a long way in protecting your investment. If you do not understand TIC: Fees and Loads in a TIC Deal than you will be doomed to lose money. An astute investor can negotiate the TIC: Fees and Loads in a TIC Deal to ensure and maximize profitability in your property investment.

Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC properties nationwide.

Of all the issues relating to TIC exchanges, TIC financing is one of the most important. Individual tenant in common finance implements separate financing for each owner after all, and so it is important for each owner involved here to be aware of TIC financing issues.

TIC financing is a concept that has actually existed for many years now, and whenever there is a title held by multiple owners but only one of the owners has signed the mortgage, then the individual TIC financing is created automatically as a result.

Dos and Don’ts

If you want to make the most of your TIC investment and put yourself at the lowest possible risk, then there are a few dos and don’ts here that you are going to want to be aware of. Getting pre-approved before you buy for instance is very important and something that you want to make sure to do.

Regardless of the particular type of property that you are looking for, you will need to show the seller involved that you are going to be able to support your share of the group financing. You are going to need to provide them with adequate proof to ensure them that you will be able to be financially responsible.

It is also imperative that investors here expect to make a down payment of at least 10% towards the purchase. Lenders tend to require larger down payments for loans secured by multi unit properties than loans that are secured by a single-family home or condominium.

A few things that you do not want to do with TIC financing include not using your interest rates as your sole criteria when searching for a TIC loan. This is important because you need to consider what is going to happen when one of your TIC partners needs to sell, and not just look for the lowest rate.

It is also best to avoid putting yourself in any situation where you would need to close quickly. Also never base your purchase decision on the expectation of converting your TIC unit to a condominium. This is important because if you get the chance to do so then fantastic, but know that this is not always going to be an option for you.

These dos and don’ts will be very helpful to any potential investor, and should always be kept in mind before deciding to go through with this investment. Speaking to a financial advisor or tax consultant will also be a good idea.

Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC properties nationwide.

Despite other kinds of investments, TIC (tenant in common) exchanges are noted for their distinct lack of liquidity (also known as “marketability”). This is one reason why you need an ext strategy that doesn’t rely on liquidity because the odds are, it’s not going to be there. TIC liquidity and exit strategies do not go together.

The Word For The Day

Liquidity is the word for the day, kids. This means being able to take stuff that you have and turn it into cash quickly. If you have blue chip stock, then you have no liquidity problems. But TIC liquidity is almost a contradiction in terms. There just aren’t as many people who want to buy into TIC shares than there are who want blue chip stocks. There are even less buyers if the real estate market is well, like it is today.

Also, there are tax problems with trying to convert your property to TIC liquidity. Exit strategies must not only exist for you as an individual, but also for your TIC partnership as a whole. If one partner goes down, he or she can easily drag down everyone else, too. The IRS is not very sympathetic to whatever problems you and your partnership may be having.

A Bad Plan

This is an example of TIC liquidity and exit strategy being considered as a quick fix to a financial problem. A group buys a strip mall and things are going well, but suddenly all the store owners leave and repairs need to be made. You need to get out from under this white elephant. You and your partners long to sell.

So you do (if you can find a buyer). But TIC liquidity and exit strategies now prove their differences. You can’t get anywhere near your asking price. Perhaps the buyer will take over the existing debt. Even if the buyer does, you still will have lost a heck of a lot of money. You haven’t exited so much as surrendered while your ship was sinking.

But the odds are that you will have the strip mall on the market for years and not be able to find a buyer. In the meantime, there are no tenants, no rent payments, but lots and lots of bills. In this case, you do not have TIC liquidity or an exit strategy that can help you financially in any way (in case a miracle happens).

Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.

TIC management risk has nothing to do with the sounds that clocks make (Then there would be a TOC management risk). TIC stands for “Tennant In Common” and is a term commonly thrown around in 1031 investing, which is usually in the real estate market. Confused yet? Good. join the club. But be sure that anything having to do with real estate is going to get the attention of the IRS.

Playing With The Big Boys

TIC management risk is something that is a concern for owners of incredibly huge buildings or big properties that need a lot of work done on them all the time. So, your double-wide will not alert the IRS to any potential TIC management risks. But if you own a huge high-rise which has a lot of tenants (or a mall with a lot of businesses paying rent, for example), then you will have a lot of problems with collecting rents, maintaining the property and paying your property taxes.

Two or more people get together as partners to own a big piece of real estate and get together for a TIC or 1031 investment in that real estate. Know how there are syndicates of dozens of people who may own the same racehorse? It’s that sort of thing, only for a building or valuable piece of property instead of a racehorse.

Don’t Do It Yourself

Although technically you could try to handle a TIC investment yourself, you can avoid a lot of TIC management risks by hiring a broker to do it. They manage your TIC real estate investments just like a broker would manage stocks or bonds. Real estate is as valuable as money. And swapping properties (like moving your share in properties like buying and selling stocks) can be a way to delay paying taxes.

One of the biggest TIC management risks is that it is virtually incomprehensible to the newcomer in investment, especially real estate investment. Since such large amounts of money are moving about, the IRS wants a piece. You can easily lose track of how much you owe and when and those are more of the very real TIC management risks.

Questions To Ask

If you’re still reading, than perhaps you are ready to explore TIC 1029 investing. In order to avoid some TIC management risks, select your broker carefully. Find out how long they have been in business and if you can easily contact them before laying any money down. You might also want to check the SEC to see if they are licensed.

Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.

There are risks in any and every aspect of the real estate market, even in 1031 TIC exchanges. (1031 is the tax-deferred version of Tennant In Common or TIC real estate investment). Just trying to find out what it is carries its own risk. Just look at the headache I have now! Oh, you can’t see me. I forgot. Let’s go on to some more practical advice about identifying and avoiding TIC market risks.

Let’s Be Careful Out There

You wouldn’t just dive into any old pool of water without knowing how deep it was, would you? (In case you didn’t know you shouldn’t do that). Any piece of real estate wanting to be sold to a TIC group shouldn’t just be snapped up without a second thought. You need to know the TIC market risk for that particular piece of real estate.

In one sense, assessing the TIC market risk of a piece of real estate is like trying to pick a horse to bet on in a horse race. What is the past performance? If you wouldn’t put $1 million on the nose of a horse that has always finished last in his or her last 100 races, then you shouldn’t invest that same million for a building owner who has tenants that never pay their rents.

You need to do your homework in order to assess just how much of a TIC market risk the property is. What condition is it in? What is its past performance? How much does the owner have in outstanding debt? What shape is the real estate market in that area? All of these things must be looked into not only by you, but your broker, and any legal counsel available to you.

Never Gamble More Than You Can Afford

Real estate is not as reckless of a gamble as betting on race horses, but it’s nearly as bad. Just because a horse has won 10 races in a row does not mean he or she is a shoo-in to win the next race. That’s the same with real estate. You need to be really honest with yourself over your finances, in case you have to be responsible for some unseen financial problems with the property.

Unlike gambling on horses, you need to devise an exit strategy with any TIC 1031 exchanges, in case your view of the TIC market risk was way too optimistic. There should be a holding period of five to seven years, where at the end your group can try to refinance for lower payments.

Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.

The TIC: National Association of Securities Dealers (NASD) is an organization that not only regulates itself but it also deals with the securities industry that in turn is engaged in operating as well as regulating NASDAQ stock market as well as over-the-counter markets. Another aspect to the TIC: National Association of Securities Dealers (NASD) is that it also administers examinations meant to check out the capabilities of professionals engaged in investing and a typical such examination is the Series 7 examination.

Disqualification Of Use

Among other organizations, the TIC: National Association of Securities Dealers (NASD) too is very much concerned with the fact that whenever a TIC is deemed to be a partnership or even a security or both, then there is every possibility that the NASD may be required to use Code Section 1031 to disqualify such use. The upshot of such disqualification by the TIC: National Association of Securities Dealers (NASD) is that TIC transactions or securities must be transacted only through securities dealers/brokers and not any real estate brokers.

At present, there is also a certain amount of conflict that generally arises when brokering of TICs takes place which may have to take the form of either security transactions or as real estate transactions and so, a grey area exists regarding whether the transaction should be deemed as a security or real estate. Furthermore, due to the fact that the TIC transactions market is mostly unregulated there is hence a need for the TIC: National Association of Securities Dealers (NASD) to take a more active role in making its own evaluation of the TIC industry as a whole.

In fact, TIC: National Association of Securities Dealers (NASD) seems to be mainly engaged in broadly interpreting the securities law according to its own viewpoint and thus will in most likelihood liken the grey area as being securities and thus include NNN as well as master lease TIC transactions which in turn would result in shutting out real estate brokers/dealers out of such dealings. What’s more, since the TIC: National Association of Securities Dealers (NASD) and the Securities Exchange Commission work in tandem, the SEC too will most probably also take the same view as taken by TIC: National Association of Securities Dealers (NASD).

Another important aspect in this regard is that the existing TIC: National Association of Securities Dealers (NASD) rules number 24-20 do not allow real estate agents from making money out of purchasing TIC interests that are being brokered in the form of securities despite the fact that state laws mandate that real estate licenses have to convey those real estate parts of each transaction.

Thus, life has certainly become a lot harder if you happen to be a real estate broker or dealer who is dealing with TIC.

Kathryn R. Landry is a business writer for TIC Advisors, Inc. A company that can give you the most complete information on a 1031 exchange or TIC property ownership.