TIC (Tenant-in-Common) investments are a type of real estate investment in which multiple investors pool their money together to purchase and manage a property. These investments can offer passive investors the opportunity to invest in real estate without the responsibilities of property management.
However, TIC investments can be complex and illiquid, and may not be suitable for all passive investors. Here are a few factors to consider:
- Risk tolerance: TIC investments carry some level of risk, including the potential for loss of principal. Passive investors should assess their risk tolerance before investing in a TIC.
- Investment horizon: TIC investments are typically long-term investments, and investors may not be able to sell their ownership interests in the property for several years. Passive investors should consider whether they have the flexibility to tie up their funds for an extended period.
- Diversification: Passive investors should also consider the diversification of their overall investment portfolio, as a TIC investment may be highly concentrated in one asset class (real estate).
- Due diligence: Passive investors should conduct thorough due diligence on the TIC investment and the property itself, including the property’s location, financial performance, and the reputation of the TIC sponsor.
Overall, TIC investments can be suitable for passive investors who are comfortable with the risks and illiquidity associated with real estate investments, and who have a long-term investment horizon. However, it is important to carefully consider the investment before making a decision and to consult with a financial advisor or other investment professionals for guidance.