Friday, 1 August 2008

Now is the Perfect Time for Real Estate Investing

(ARA) – We all understand the income potential of investing in real estate. Some people decide to buy apartments or commercial buildings to rent and manage themselves. This can be rewarding, but can also be a lot of work. What if you could have the benefits of a commercial investment, but without the many subsequent responsibilities?

Many people are finding tenant in common (TIC), or undivided fractional interest, to be an investment option that makes sense. TIC is a real estate method in which a group of people buy a significant real estate asset together, often much larger than they could obtain individually. Each investor is on the title and deed for their percentage of ownership and they own and control the property. Each owner receives rental income and the tax benefits of traditional real estate investing.

“Tenant in common ownership can benefit the individual new to real estate investing or seasoned pros. Some investors are looking for a new source of income post-retirement. Others have managed apartment complexes, mobile home parks, etc., themselves, but they don’t want the hassles of maintenance and management any longer,” says Curt Smiley, owner of TIC Investments, Inc., a real estate company focused on offering individuals access to corporate-grade real estate. “TICs open up new options for investors with many benefits.”

If you are thinking about investing in real estate, Smiley suggests you consider the following:

* Building Occupancy
How much of the building is currently leased? When investing, you should know the occupancy percentage and existing lease terms for each tenant.
* Risk Assessment
A property with a majority of the space leased to government agencies or Fortune 500 companies generally offers less risk than properties where a majority of the tenants are smaller, independent companies.
* History
Before investing, you should have adequate information about the history of the building and the history of the real estate company packaging the TIC opportunity.
* Experienced Counsel
TIC investing can be complicated. It’s best to work with a TIC representative who has years of experience and knowledge in the industry. Can they tailor a program to match your specific needs? Can they analyze the proforma to determine if the projections are realistic? All your questions should be answered in detail.

There are many benefits of TIC investing. Here are some of the reasons why people are choosing this method:

Equal Ownership
Smiley explains that TIC ownership allows each investor to have the same ownership rights regardless of the equity invested so that no individual or group has direct control.

Complete Investment
Investors work with a sponsor, who is the real estate company that packages and offers the TIC opportunity to the public. The sponsor first locates and secures the property then performs due diligence on the asset. The sponsor also obtains an appraisal, Phase 1 and the non-recourse loan thus the price the investor pays is a full, complete investment.

Control without Hassle
One of the most notable benefits of TIC ownership is the property management arrangement. The property management company works directly for the TIC owners. This characteristic enables investors to have a voice in all the substantial decision-making on the property without worrying about the day-to-day, tedious aspects normally associated with owning real estate.

Historically, TIC Investments have returned a 10 to 15 percent average annualized return to owners. “Just as with any investment, there are risks, but many investors are very successful by choosing TICs. A good TIC representative will work directly with you to analyze your investment goals and risk tolerance, find the best opportunities and diversify your investment if possible,” says Smiley.

Tax Benefits
A 1031 Exchange is an IRS procedure which allows investment property owners to defer paying capital gains and depreciation recapture taxes on their equity principal. A TIC investment also allows individuals to write-off property depreciation, interest on the loan, etc., often sheltering much of the owners’ monthly income.

An investment in a TIC property offers attractive advantages, but it’s not for everyone. A TIC option may not be right for you depending on your particular tax situation or if you want complete control over the daily responsibilities of your property. However, if you are seeking a stable real estate investment that will not require your constant attention yet may provide you with reliable, monthly income, it may be a good choice.

To learn more visit or call 866-966-1031.

Courtesy of ARAcontent

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