tic properties, or tenant-in-common (TIC) properties, are an affordable, alternative real estate investment opportunity that has been a popular option for investors looking to diversify their portfolios. They are also a viable choice for tax deferrals through 1031 exchanges.
Tenancy in Common properties are 10-20% less expensive than condos, meaning they are a great way to get into the market for a lower price or buy a property in a desirable area at a discount to entry-level condo pricing. They also appreciate at the same rate as condos, so you get similar % returns on your investment when you sell it.
The main drawbacks of TICs are weak associations and limited financing options. A strong association is able to cover most expenses for the building, including water bills, electricity and gas, maintenance and gardener fees, and property taxes.
Weak associations can lead to disputes among co-owners over how to use space and manage the building, said Jeff Woo, a San Francisco property attorney specializing in TICs. A good TIC agreement should address these issues, but they still can be difficult to resolve, Woo said.
Often, these problems can be avoided by working with a property management professional that has a strong track record of managing TIC assets. These companies structure the TIC acquisition, evaluate and arrange financing, manage the property, lease and collect rent, service mortgages and eventually sell the TIC assets.