TIC Management Risk in Plain English

TIC Management Risk in Plain English
By Gary K Landry

TIC management risk has nothing to do with the sounds that clocks make (Then there would be a TOC management risk). TIC stands for "Tennant In Common" and is a term commonly thrown around in 1031 investing, which is usually in the real estate market. Confused yet? Good - join the club. But be sure that anything having to do with real estate is going to get the attention of the IRS.

Playing With The Big Boys

TIC management risk is something that is a concern for owners of incredibly huge buildings or big properties that need a lot of work done on them all the time. So, your double-wide will not alert the IRS to any potential TIC management risks.

But if you own a huge high-rise which has a lot of tenants (or a mall with a lot of businesses paying rent, for example), then you will have a lot of problems with collecting rents, maintaining the property and paying your property taxes.

Two or more people get together as partners to own a big piece of real estate and get together for a TIC or 1031 investment in that real estate. Know how there are syndicates of dozens of people who may own the same racehorse? It's that sort of thing, only for a building or valuable piece of property instead of a racehorse.

Don't Do It Yourself

Although technically you could try to handle a TIC investment yourself, you can avoid a lot of TIC management risks by hiring a broker to do it. They manage your TIC real estate investments just like a broker would manage stocks or bonds. Real estate is as valuable as money. And swapping properties (like moving your share in properties like buying and selling stocks) can be a way to delay paying taxes.

One of the biggest TIC management risks is that it is virtually incomprehensible to the newcomer in investment, especially real estate investment. Since such large amounts of money are moving about, the IRS wants a piece. You can easily lose track of how much you owe and when and those are more of the very real TIC management risks.

Questions To Ask

If you're still reading, than perhaps you are ready to explore TIC 1029 investing. In order to avoid some TIC management risks, select your broker carefully. Find out how long they have been in business and if you can easily contact them before laying any money down. You might also want to check the SEC to see if they are licensed.

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TIC Management Risk in Plain English

What is a TIC - Attorney Opinion Letter?

What is a TIC - Attorney Opinion Letter?
By Gary K Landry

One of the most important components of any TIC investment is the TIC: attorney opinion letter. Most PPMs of securitized TICs will, or at least should, include the TIC: attorney opinion letter, and so it is something that all investors and potential investors should be aware and understanding of.

What it is

The TIC: attorney opinion letter is used in particular situations. Occasionally, TIC interests are treated as real estate rather than as securities, and in this situation a TIC: attorney opinion letter can be used.

Sponsors here obtain legal opinions from their own law firms, stating that the TIC interests they are selling are interests in real estate, rather than securities. The client can then use this opinion and rely on it, and can even seek to obtain damages from the party that gave the opinion if any of it proves to be false or if the opinion turns out to be incorrect in some way.

TIC promoters and investors in TICs should exercise all the caution and prudence that they can, in order to best protect themselves and also to ensure that the entire process goes through as smoothly as possible.

There are many ways that one can do this, one being that if the Master Lease arrangement should be used to avoid the prohibition on the use of a single name.

In this and similar cases, a TIC: attorney opinion letter should be obtained in order to negate any possible tax penalties.

Pros and Cons

In general, it is important to be aware of the pros and cons of something before going through with it, and the same rule applies to the TIC financing option. There are a lot of different factors that one should consider when purchasing a TIC.

Whether there have been any evictions on the property they are considering, how long the current TIC partners have been in place, and how many units are in the building, for instance, are all relevant and very important to take into consideration here.

Although they do hold many benefits, TICs are also quite risky, and are subject to changes in legislation that could offer a negative blow at any point.

Because of this it is important for anyone even just considering investing in a TIC to make themselves more educated and to speak to a professional in this area so they can get help in deciding whether this is going to be a smart financial move for them or not.

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What is a TIC - Attorney Opinion Letter?