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What Are The Differences Between Tenants In Common (TIC) And Real Estate Investment Trust (REIT) Investments?

Tenants in Common (TIC) and Real Estate Investment Trusts (REIT) are both investment structures that allow individuals to invest in real estate. However, there are some key differences between the two:

Tenants in Common (TIC):

  • A TIC is a type of joint ownership structure where multiple individuals hold a fractional interest in a property.
  • TIC ownership gives each individual the right to occupy and use a specific portion of the property.
  • TIC investments offer investors the ability to own a portion of a property and share in its income and appreciation.
  • TIC investments typically require a higher minimum investment amount and offer more control over the property compared to REITs or DSTs.

Real Estate Investment Trust (REIT):

  • A REIT is a type of investment trust that pools funds from multiple investors to purchase and manage real estate properties.
  • REITs are required to distribute at least 90% of their taxable income to investors in the form of dividends.
  • REITs offer investors the ability to invest in a diversified portfolio of properties, reducing the risk associated with a single property investment.
  • REITs are publicly traded, allowing investors to buy and sell their shares on stock exchanges, providing liquidity.

In summary, TICs offer a higher level of control and direct ownership in a specific property, while REITs provide a more passive investment structure with a diversified portfolio of properties. TICs typically require a higher minimum investment and offer limited liquidity, while REITs provide a lower minimum investment and more liquidity through publicly traded shares. Both types of investments can offer the benefits of real estate investment returns, but it is important to consider the specific differences and choose the investment structure that best aligns with your investment goals and risk tolerance.