Are you looking for a new investment opportunity, but unsure about your options as a non-accredited investor? Have you heard of Tenants in Common (TIC) and want to know more? If so, you’ve come to the right place.
What Is A Non-Accredited Investor?
A non-accredited investor is an individual who does not meet the SEC’s criteria for accredited investors. Accredited investors typically have a high net worth or income, and are considered to be “financially sophisticated”. Non-accredited investors have more limitations in terms of the types of investments they can make and for those in a 1031 exchange, options can be very limited.
An Accredited Investor may be:
- A bank, insurance company, registered investment company, business development company, or small business investment company.
- An employee benefit plan that is governed by the Employee Retirement Income Security Act (ERISA), provided that a bank, insurance company, or registered investment advisor is responsible for making investment decisions and the plan has total assets exceeding $5 million.
- A charitable organization, corporation, or partnership with assets exceeding $5 million.
- A director, executive officer, or general partner of the company issuing the securities.
- A business in which all equity owners are accredited investors.
- An individual who has a net worth, either alone or with their spouse, exceeding $1 million at the time of purchase, excluding the value of their primary residence, or has assets under management exceeding $1 million.
- An individual with an income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.
- A trust with assets exceeding $5 million, not created specifically to acquire the securities being offered, and whose purchases are made by a sophisticated person.
What Is Tenants In Common (TIC)?
Tenants in Common is a type of co-ownership arrangement where multiple individuals own a piece of real estate together. Each owner holds a distinct and undivided ownership interest in the property, and has the right to sell, lease, or transfer their interest as they see fit. TIC is a popular investment option for individuals looking to invest in commercial real estate and can offer a variety of benefits.
Benefits of TIC for Non-Accredited Investors
TIC investments can offer a number of benefits for non-accredited investors, including:
Diversification: TIC investments can provide non-accredited investors with a way to diversify their portfolios, helping to reduce risk and increase potential returns. Minimum investments are typically $100,000 but sometimes go as low as $50,000.
Access to Commercial Real Estate: TIC investments can provide non-accredited investors with an opportunity to invest in commercial real estate, a traditionally exclusive investment opportunity.
Professional Management: TIC investments are often professionally managed, meaning that non-accredited investors do not need to be as hands-on with their investments.
Liquidity: TIC investments can offer non-accredited investors more liquidity than other types of real estate investments, allowing them to sell their interest in the property if they need to.
Potential for Higher Returns: TIC investments can offer non-accredited investors the potential for higher returns than other types of investments, due to the strong demand for commercial real estate.
It is important to note that TIC investments are not without risk, and all potential investors should conduct their own due diligence before making any investment decisions.
Is It Right For You?
Tenants in Common can be an attractive investment opportunity for non-accredited investors, offering access to high-quality commercial real estate, no landlord duties, professional management to collect and distribute rents, liquidity, and the potential for predictable and steady returns. However, all potential investors should carefully consider the risks involved and seek professional advice before making any investment decisions.
If you are a non-accredited investor looking to learn more about TIC investments, contact one of our seasoned 1031 advisors today to discuss your options and find the right investment opportunity for you.