Are you an agent with clients looking to get started in commercial real estate? Or are you an investor looking to take the first step toward owning a commercial property? Both beginners and seasoned professionals should know about the power of tenant in common ownership in owning commercial real estate property.
Tenant in common (TIC) ownership is a form of joint ownership of commercial real estate where two or more individuals or entities share ownership in a single property. Each owner has a percentage interest in the property and is entitled to a portion of the income, expenses, and appreciation of the property. Here are some of the benefits of TIC ownership in commercial real estate:
1. Diversification: TIC ownership allows investors to spread their investments across multiple properties and markets, reducing the risk of concentration in a single property or location.
2. Lower investment requirement: With TIC ownership, investors can purchase a fractional interest in a larger commercial property for a lower investment requirement, which allows them to diversify their portfolio. Millcreek Commercial has seen that firsthand as our deal sizes have varied in size over the years. One of the smallest deal sizes we have worked with was a $24,000 investment. With needs and amounts that vary from investor to investor, TIC ownership makes it possible to cater to the unique situation of all.
3. Passive income: TIC ownership provides investors with passive income from rental income generated by the property, without the need for active involvement in property management.
4. Professional property management: TIC ownership allows investors to benefit from professional property management, which helps ensure that the property is properly maintained, tenants are screened, leases are renewed, and the property is generating maximum rental income.
5. Flexibility: TIC ownership provides investors with flexibility in terms of their investment duration and exit strategy. They can sell their interest at any time or hold onto it for as long as they want.
6. Tax benefits: TIC ownership provides investors with tax benefits such as depreciation, interest deductions, and pass-through income. Investors can even use a 1031 exchange to defer taxes when selling a fractional interest in a TIC property. For example, if an investor sells their fractional interest in a TIC property and reinvests the proceeds in another like-kind property through a 1031 exchange, they can defer paying taxes on the capital gains from the sale of their interest in the TIC property.
Overall, TIC ownership can be an attractive investment option for commercial real estate investors looking to diversify their portfolio, generate passive income, benefit from professional property management, and enjoy tax benefits. Millcreek Commercial specializes in having a robust portfolio of commercial properties specially designated for TIC ownership. If you are interested in getting starting on the path toward owning a TIC property, get connected with one of our Millcreek Commercial associates today!