So you’re wanting to jump into the commercial real estate world with your first investment–where should you start? Here are four simple reasons why first-time investors should consider tenant in common (TIC) ownership for their commercial real estate investment.
Tenancy in common ownership opens the door to investment opportunities at a variety of price points. In a tenant in common ownership structure, investors can invest in a PERCENTAGE of ownership, rather than FULL OWNERSHIP of a building–be it 1% to 99%. Investors may discover a minimum investment percent or amount, but even so, a TIC ownership opportunity brings the opportunity to invest at a level that is attainable for investors.
Thanks to the affordability that comes with a TIC structure, first-time investors who may not have as much access to funds needn’t shy away from the chance to get started with their first commercial real estate investment.
Because of the affordability of a tenant in common ownership, it is easier to diversify one’s portfolio with other TIC properties. With the investment funds one has available, one can invest in small portions of multiple properties–for example, 15% in a medical property, 30% of a retail property, and 55% of another–the possibilities are limitless. (Interested? Here are a few ideas of potential properties) Co-owners can seek out additional in a variety of emerging cities and suburbs across the United States, adding diversification and value to their portfolio.
There are many responsibilities that can come with sole ownership, many of which can overwhelm a first-time investor (or any investor, really). However, tenancy in common ownership can be the ideal structure for investors who are interested in being freed from the day-to-day management hassles of sole ownership.
The Tenant in Common is on title and benefits from legally proscribed involvement and voting rights on large issues. The majority of property improvements are handled by a third-party property management company. Therefore, the tenant in common investor group enjoys a “hands-off” ownership experience.
One worry that can come to investors is the idea of being “locked-in” a deal by the other owners in the TIC ownership. The good news is that in TIC ownership, any party can part with his or her share legally without needing consent or approval from the other party; So if the time comes to sell or exchange portion of ownership, one can start the process right away.