TIC transactions have exploded in popularity over the past few years, and are now a hot topic among commercial real estate professionals. A TIC Agreement is used to establish the rights of people who own property together but who are not married. This is a very important agreement because without it there would be no legal obligations on the property and various liabilities and loss could occur as a result.
TIC: Property Management and Asset Management
Just as with all other real estate investments, there are certain possible risks that come along with the TIC investments. Because of this it is important that all investors and potential investors are sure to carefully review all materials related to these investments before going through with it.
In particular potential investors should be aware of the restrictions on transferring TIC interests. There are many different tax risks and tax issues that are involved and TIC: property management and asset management needs to be properly understood by a person considering it.
For one, there is no absolute guarantee that cash distributions will continue with a TIC, and so TIC: property management and asset management obviously needs to be taken very seriously because otherwise serious financial drawbacks may occur.
There is also the potential for foreclosure with this investment, as any and all financed real estate investments do have the potential for the possibility of foreclosure. There are things that can be done in order to alleviate the foreclosure risk or at least some of it, but it is important that you take the necessary steps to do this.
Also on the topic of TIC: property management and asset management, there is the potential for having an illiquid investment, which is easily one of the most major advantages. Illiquidity is a common feature of alternative investments, but the diversity of hedge fund investments.
It is important to discuss any investments including a TIC: property management and asset management that you are considering with a qualified and experienced tax consultant first, so that they can assess your current situation and help you to really decide whether this is going to be a wise decision for you at this point in your life.
It is imperative that you be understanding of the investment and of what you stand to lose, because if you go into anything without being fully knowledgeable on it, especially when it has to do with your finances, you are putting yourself at great risk.
Gary K. Landry is the CEO of TIC Advisors, Inc. He presents complete information on 1031 exchange and TIC property ownership on his website, http://www.ticadvisors.com
