TIC (Tenants In Common) Investments

[34f3f3f]

I see lot’s of references to 1031 exchanges and fraud, but are there any reputable brokers and good investments out there? I guess they can be bought separately and not through a 1031 exchange? Are stock brokers the only way to buy them? I’d guess a broker with close links to CRE would be the best bet.

[EconProf]

TIC’s are a unique way of owning real estate by having a percentage of the property, alongside other TIC owners, each with a percentage that adds up to 100%. They were popular a few years ago when investors were flush with capital gains on their long-held properties and sought to escape management duties by doing a tax-free exchange into a big property while escaping management duties.
Great concept in theory, but depends on two things working out: 1) Successfully farming out the management to outsiders you have to trust, and 2) Timing within the big real estate cycle. On both counts I have been unlucky, and am now paying the price.
Five years ago, flush with a big capital gain, I put several hundred thousand dollars into a promising TIC. It seemed to have everything: cash flow, great loan (5.06%!), experienced management, good RE product (high end apartment complex in the plush suburb of Overland Park, KS), and the TIC concept itself, which seemed fail-safe.
But the RE market peaked shortly thereafter, monthly cash flow checks, originally 8% on my investment, slowed and then stopped, and the management company, seeing the abyss, started to “milk” the property for its own cash flow benefit, knowing they would soon bail.
They sold, or gave away–not sure yet–their management contract to another firm. Three of us activist TIC owners, out of 24, are now trying to get answers. The new managers are on our side, and see the potential of the property itself and the rapidly-improving market it is in.
In retrospect, the big problem was timing within the grand real estate cycle. Had RE not nose-dived, the original management company would have hung in there. Five years ago everyone was looking at the fantastic returns of the immediate past. I assumed a less bouyant trend in rents and prices that would still generate a fairly riskless, moderate return. I just did not factor in a melt-down in virtually everything.
A lot of TICs are in trouble now, and many people have lost much or all of their investment. The leverage involved pretty much dictates that returns will be terrific in an up market and awful in a down market. But TICs will come back, if and when the broader market recovers.

[EconProf]

TIC’s are a unique way of owning real estate by having a percentage of the property, alongside other TIC owners, each with a percentage that adds up to 100%. They were popular a few years ago when investors were flush with capital gains on their long-held properties and sought to escape management duties by doing a tax-free exchange into a big property while escaping management duties.
Great concept in theory, but depends on two things working out: 1) Successfully farming out the management to outsiders you have to trust, and 2) Timing within the big real estate cycle. On both counts I have been unlucky, and am now paying the price.
Five years ago, flush with a big capital gain, I put several hundred thousand dollars into a promising TIC. It seemed to have everything: cash flow, great loan (5.06%!), experienced management, good RE product (high end apartment complex in the plush suburb of Overland Park, KS), and the TIC concept itself, which seemed fail-safe.
But the RE market peaked shortly thereafter, monthly cash flow checks, originally 8% on my investment, slowed and then stopped, and the management company, seeing the abyss, started to “milk” the property for its own cash flow benefit, knowing they would soon bail.
They sold, or gave away–not sure yet–their management contract to another firm. Three of us activist TIC owners, out of 24, are now trying to get answers. The new managers are on our side, and see the potential of the property itself and the rapidly-improving market it is in.
In retrospect, the big problem was timing within the grand real estate cycle. Had RE not nose-dived, the original management company would have hung in there. Five years ago everyone was looking at the fantastic returns of the immediate past. I assumed a less bouyant trend in rents and prices that would still generate a fairly riskless, moderate return. I just did not factor in a melt-down in virtually everything.
A lot of TICs are in trouble now, and many people have lost much or all of their investment. The leverage involved pretty much dictates that returns will be terrific in an up market and awful in a down market. But TICs will come back, if and when the broader market recovers.

[EconProf]

TIC’s are a unique way of owning real estate by having a percentage of the property, alongside other TIC owners, each with a percentage that adds up to 100%. They were popular a few years ago when investors were flush with capital gains on their long-held properties and sought to escape management duties by doing a tax-free exchange into a big property while escaping management duties.
Great concept in theory, but depends on two things working out: 1) Successfully farming out the management to outsiders you have to trust, and 2) Timing within the big real estate cycle. On both counts I have been unlucky, and am now paying the price.
Five years ago, flush with a big capital gain, I put several hundred thousand dollars into a promising TIC. It seemed to have everything: cash flow, great loan (5.06%!), experienced management, good RE product (high end apartment complex in the plush suburb of Overland Park, KS), and the TIC concept itself, which seemed fail-safe.
But the RE market peaked shortly thereafter, monthly cash flow checks, originally 8% on my investment, slowed and then stopped, and the management company, seeing the abyss, started to “milk” the property for its own cash flow benefit, knowing they would soon bail.
They sold, or gave away–not sure yet–their management contract to another firm. Three of us activist TIC owners, out of 24, are now trying to get answers. The new managers are on our side, and see the potential of the property itself and the rapidly-improving market it is in.
In retrospect, the big problem was timing within the grand real estate cycle. Had RE not nose-dived, the original management company would have hung in there. Five years ago everyone was looking at the fantastic returns of the immediate past. I assumed a less bouyant trend in rents and prices that would still generate a fairly riskless, moderate return. I just did not factor in a melt-down in virtually everything.
A lot of TICs are in trouble now, and many people have lost much or all of their investment. The leverage involved pretty much dictates that returns will be terrific in an up market and awful in a down market. But TICs will come back, if and when the broader market recovers.

[EconProf]

TIC’s are a unique way of owning real estate by having a percentage of the property, alongside other TIC owners, each with a percentage that adds up to 100%. They were popular a few years ago when investors were flush with capital gains on their long-held properties and sought to escape management duties by doing a tax-free exchange into a big property while escaping management duties.
Great concept in theory, but depends on two things working out: 1) Successfully farming out the management to outsiders you have to trust, and 2) Timing within the big real estate cycle. On both counts I have been unlucky, and am now paying the price.
Five years ago, flush with a big capital gain, I put several hundred thousand dollars into a promising TIC. It seemed to have everything: cash flow, great loan (5.06%!), experienced management, good RE product (high end apartment complex in the plush suburb of Overland Park, KS), and the TIC concept itself, which seemed fail-safe.
But the RE market peaked shortly thereafter, monthly cash flow checks, originally 8% on my investment, slowed and then stopped, and the management company, seeing the abyss, started to “milk” the property for its own cash flow benefit, knowing they would soon bail.
They sold, or gave away–not sure yet–their management contract to another firm. Three of us activist TIC owners, out of 24, are now trying to get answers. The new managers are on our side, and see the potential of the property itself and the rapidly-improving market it is in.
In retrospect, the big problem was timing within the grand real estate cycle. Had RE not nose-dived, the original management company would have hung in there. Five years ago everyone was looking at the fantastic returns of the immediate past. I assumed a less bouyant trend in rents and prices that would still generate a fairly riskless, moderate return. I just did not factor in a melt-down in virtually everything.
A lot of TICs are in trouble now, and many people have lost much or all of their investment. The leverage involved pretty much dictates that returns will be terrific in an up market and awful in a down market. But TICs will come back, if and when the broader market recovers.

[EconProf]

TIC’s are a unique way of owning real estate by having a percentage of the property, alongside other TIC owners, each with a percentage that adds up to 100%. They were popular a few years ago when investors were flush with capital gains on their long-held properties and sought to escape management duties by doing a tax-free exchange into a big property while escaping management duties.
Great concept in theory, but depends on two things working out: 1) Successfully farming out the management to outsiders you have to trust, and 2) Timing within the big real estate cycle. On both counts I have been unlucky, and am now paying the price.
Five years ago, flush with a big capital gain, I put several hundred thousand dollars into a promising TIC. It seemed to have everything: cash flow, great loan (5.06%!), experienced management, good RE product (high end apartment complex in the plush suburb of Overland Park, KS), and the TIC concept itself, which seemed fail-safe.
But the RE market peaked shortly thereafter, monthly cash flow checks, originally 8% on my investment, slowed and then stopped, and the management company, seeing the abyss, started to “milk” the property for its own cash flow benefit, knowing they would soon bail.
They sold, or gave away–not sure yet–their management contract to another firm. Three of us activist TIC owners, out of 24, are now trying to get answers. The new managers are on our side, and see the potential of the property itself and the rapidly-improving market it is in.
In retrospect, the big problem was timing within the grand real estate cycle. Had RE not nose-dived, the original management company would have hung in there. Five years ago everyone was looking at the fantastic returns of the immediate past. I assumed a less bouyant trend in rents and prices that would still generate a fairly riskless, moderate return. I just did not factor in a melt-down in virtually everything.
A lot of TICs are in trouble now, and many people have lost much or all of their investment. The leverage involved pretty much dictates that returns will be terrific in an up market and awful in a down market. But TICs will come back, if and when the broader market recovers.

[SD Realtor]

I have a former client who lost a few hundred thousand in the TIC she invested in. The combination of poor timing and no visibility or power to do anything doomed her.

[SD Realtor]

I have a former client who lost a few hundred thousand in the TIC she invested in. The combination of poor timing and no visibility or power to do anything doomed her.

[SD Realtor]

I have a former client who lost a few hundred thousand in the TIC she invested in. The combination of poor timing and no visibility or power to do anything doomed her.

[SD Realtor]

I have a former client who lost a few hundred thousand in the TIC she invested in. The combination of poor timing and no visibility or power to do anything doomed her.

[SD Realtor]

I have a former client who lost a few hundred thousand in the TIC she invested in. The combination of poor timing and no visibility or power to do anything doomed her.

[EconProf]

Yep, timing is everything.
The concept was touted by commissioned sales people and seminars, always a red flag.
Still, TICs could evolve into viable products if competition and the transparency of an efficient marketplace took hold. For example, shares should be able to be bought and sold. Right now our old-fashioned founding documents allow it only with a $25k fee.
REITs also evolved to become respectable investments, but it has taken decades. With today’s computer-enabled communications, TICs will come along faster. The 1031 exchange aspect of TICs are just too compelling for them to fade away.

[EconProf]

Yep, timing is everything.
The concept was touted by commissioned sales people and seminars, always a red flag.
Still, TICs could evolve into viable products if competition and the transparency of an efficient marketplace took hold. For example, shares should be able to be bought and sold. Right now our old-fashioned founding documents allow it only with a $25k fee.
REITs also evolved to become respectable investments, but it has taken decades. With today’s computer-enabled communications, TICs will come along faster. The 1031 exchange aspect of TICs are just too compelling for them to fade away.

[EconProf]

Yep, timing is everything.
The concept was touted by commissioned sales people and seminars, always a red flag.
Still, TICs could evolve into viable products if competition and the transparency of an efficient marketplace took hold. For example, shares should be able to be bought and sold. Right now our old-fashioned founding documents allow it only with a $25k fee.
REITs also evolved to become respectable investments, but it has taken decades. With today’s computer-enabled communications, TICs will come along faster. The 1031 exchange aspect of TICs are just too compelling for them to fade away.

[EconProf]

Yep, timing is everything.
The concept was touted by commissioned sales people and seminars, always a red flag.
Still, TICs could evolve into viable products if competition and the transparency of an efficient marketplace took hold. For example, shares should be able to be bought and sold. Right now our old-fashioned founding documents allow it only with a $25k fee.
REITs also evolved to become respectable investments, but it has taken decades. With today’s computer-enabled communications, TICs will come along faster. The 1031 exchange aspect of TICs are just too compelling for them to fade away.

[Author]

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