TIC (Tenant-in-Common) properties allow multiple investors to co-own a property, sharing the expenses and profits in proportion to their ownership share. Here are some key factors to consider before investing in a TIC property:
- Property quality and location: The quality and location of the property are critical factors to consider before investing. You need to assess whether the property is in a desirable location and whether it meets your investment objectives. Research the local real estate market to understand property values and trends.
- Property management: It is important to evaluate the property management company responsible for the TIC property. You want to ensure that they have a good reputation and a solid track record of managing similar properties.
- Cash flow projections: You should review the cash flow projections to understand the expected income and expenses associated with the property. You need to ensure that the rental income is sufficient to cover operating expenses, and mortgage payments, and provide a return on your investment.
- Risks and returns: As with any investment, there are risks associated with TIC properties, and you need to assess them carefully. Evaluate the potential risks, such as changes in interest rates, local economic conditions, and tenant occupancy. You should also assess the potential returns associated with the investment.
- Legal structure: You should work with a lawyer experienced in TIC investments to review the legal structure of the investment. You want to ensure that you understand your rights and obligations as a TIC investor and that the structure aligns with your investment objectives.
- Co-owners: You will be co-owning the property with other investors. It is important to evaluate the other co-owners and ensure that they share your investment goals and objectives. You should also review the TIC agreement to understand the co-ownership structure, rights, and responsibilities of each owner.
- Exit strategy: Finally, you should consider your exit strategy before investing in a TIC property. Understand the options available for selling your ownership share and ensure that you have a clear understanding of the costs and risks associated with each option.