By CHRISTINA S. PORTER
Owning investment real estate as a Tenant In Common (TIC) provides investors with several advantages of which diversification and a lack of management responsibilities are primary. The two most common disadvantages involve the questions of liquidity and control.
TICs are not for everyone,but can play an important role for investors who are informed of the trade offs of TIC ownership.
Even though all TIC investments are, at bottom, real estate, some are structured and sold as securities while others are sold as real estate. A security is defined as an investment of money in a common enterprise with the expectation of profit based solely on the efforts of others. Some TICs meet this definition without question, but most are simply real estate investments with more than one owner.
As with all investments, the real question is what the likelihood of success is, does the investor fully understand the risk they are taking, are they being properly compensated for the risk they are taking and is the level of risk appropriate for their personal circumstances.
There are several ways to achieve the goal of satisfying a 1031 exchange, building a portfolio of properties that require little or no management and to minimize investment risk. As with all investments, TIC have both positive and negatives when compared with other investment and at the very least should be considered when reviewing possible investment alternatives.
Christina Porter (877) 4TM-1031, or TM 1031 Exchange assists investors in planning and executing successful real estate investment strategies.† Visit www.tm1031exchange.com for a complete list of investment properties.
Originally published in the Santa Monica Daily Press print edition on October 11, 2006. Read the original PDF.