Tenants in common (TIC) investment is a type of real estate ownership in which two or more individuals own a single property together. Each owner has a percentage of ownership in the property, which can be equal or unequal. The tenants in common arrangements allow each owner to sell or mortgage their individual ownership interest in the property without the consent of the other owners.
TIC investments are typically structured as real estate partnerships, in which investors pool their resources to purchase and manage commercial real estate properties, such as office buildings, retail centers, or apartment buildings. Each investor in a TIC owns a proportional share of the property and is entitled to a proportional share of the income and tax benefits generated by the property.
The TIC ownership structure can be beneficial for investors who want to own a piece of commercial real estate but do not have the resources to purchase an entire property on their own. Additionally, TIC investments offer several advantages over other types of real estate investments, including:
- Diversification: TIC investments allow investors to diversify their real estate holdings by owning a fractional interest in multiple properties.
- Passive income: TIC investors can receive regular income from their investment without having to actively manage the property.
- Reduced risk: By owning a fractional interest in a property, TIC investors can reduce their exposure to the risks associated with owning a single property.
- Tax benefits: TIC investors can benefit from tax deductions and deferrals associated with real estate ownership, such as depreciation, mortgage interest, and property taxes.
However, TIC investments also have some drawbacks to consider, such as potential conflicts between co-owners, limited control over the property, and limited liquidity. It’s important for investors to thoroughly research and understand the risks and benefits of TIC investments before making a decision.