I've been doing research for months on this commercial investment vehicle and I'd like to develop an educational discussion for anyone who might be interested.

How do you define a TIC Company?

Tenancy in Common (TIC) is a way of holding title to real estate, in which the investor maintains a deeded, fractional interest in real property. The investor receives monthly income and can take full advantage of the tax benefits allotted to investment property owners, namely deferral of capital gains (through a 1031 exchange), annual depreciation and the potential appreciation upon sale.

The key to TIC investments is fractional ownership. A group of investors is organized, or "sponsored," under a TIC structure and the group is then able to acquire a large commercial property.

TIC investments are ideal for knowledgeable investors tired of personal day-to-day property management, but still attracted to the benefits of real estate ownership. TIC investments share the full tax and wealth preservation benefits of sole-owned real estate, typically offer the same or better cash flow, and eliminate the headaches of day-to-day management. They also provide long-term investment appreciation potential.

TIC investors are directly on title to the property and are allowed to sell their interests to other TIC investors and to buyers outside of their TIC agreement. TIC agreements include other aspects of the IRS guidelines and allow all participants to benefit from a structured operational agreement.

TIC is pretty popular. I'm working with a group of investors who would like to buy some investments in a TIC. They're not rich, but thought TIC would be a good way of holding real estate without complications of some of the other methods.

Here are a few good resources
http://www.jonesbahamas.com/?c=135&a=6141
http://www.globallawreview.com/jointtenancy.html
What is the difference between a tenancy in common and a condominium?
Why not form an LLC or limited partnership instead of a tenancy in common?http://www.andysirkin.com/HTMLArticle.cfm?Article=1&Hit=1

This is very interesting..is it similar to a syndication? Is this the one in which 95% of the profit is split between all tic's? Is this partitioning? Sorry, really would like to know.

yes its similar to a syndication. im not sure of the actual percentages but i do know that the sponsor of the TIC gets a management fee. the TICs are held to a maximum of 35 investors in an LLC and the split is made accordingly to their shares/contribution.

heres a few links that ive been doing research on. http://www.1031nnn.com
http://www.ticmls.com
http://www.ticassociation.org
http://www.replacementproperty.com/
http://www.1031ExchangeOptions.com
http://www.tm1031exchange.com/
http://www.1031horizons.com/
http://www.trustreet1031.com
http://www.sciproperties.com/
http://www.spectrusgroup.com
http://www.weltonstreet.com/
http://www.1031ticbrokers.com/
http://www.wanderingstar.com/loopnet/loopnet.html
http://www.w1031re.com
http://www.sfaa.org
http://www.toseeka.com
http://www.TM1031Exchange.com
http://www.ticproperties.com
http://www.1031AdvisorsUSA.com
http://www-tics.com
http://www.For1031.com
http://www.lakeoftheozarksreal-estate.com
http://www.andrewstuart.net
http://www.1031ticinvest.com
http://www.ticassoc.org
http://www.1031intoTIC.com[/URL]
http://www.remnewsletters.com/pub/globenews_ticmonthly/archives.phtml

One of the strongest and most reputable TIC marketers is the FOR1031 arm of the Spectrus group. They have aligned with DBSI, (who has been managing large commercial properties since 1979), and has never had any capital contribution requests from the investors,(as some others have), they have always paid any outstanding debt on time, and the monies due the TIC owners like clockwork.
You can find them at www.spectrusgroup.com

RE: TICs: The IRS says a max of 35 people involved. Each must have a separate deed as tenent in common. And you can exchange into them and defer any and all capital gain taxes. Great for the conservative investor. Totally hands free investing
Caveat: REIT promote TICs also. But one is buying a "security" instrument instead of getting a deed. IRS disallows exchanging from real estate to securities.
Must be "like for Like"

thanks for the info

im currently setting up my LLC to eventually become a private REIT.

Alvin,

I know some companies allow you to collect a 2-3% buyer's agent fee for bringing a qualified buyer just like any other real estate transaction.

I think it could be beneficial if we started putting together such a list as an agent resource.

What do you think?

www.spectrusgroup.com
They do. 2% of total.
They usually have properties with approx. 50/50 debt and equity ratio. (non-recourse loans in place).
They pay on full amount. Some only pay on the "equity" portion that was put in by the investor.

Also, re: REIT. They cannot pay referral fees to real estate agents

Oh, by the way, I don't work for them, but I have worked "with" them. They have always been professional.

(I just didn't want it to sound like a commercial)

www.sciproperties.com

They pay 3%

I've never worked with them, but it looks like I may be in the next few weeks. I'll keep everyone posted.

I checked out their site.
Yes they do pay 3% Qoute from their site: "At SCI, we pay 3% fees on referred equity"
Equity. That is the issue.
Not the equity and any underlying non-recourse loan. ( which is usually around 50% LTV)
So if an investor has say, $500,000 to get into a SCI TIC, the total referral would be 3% of the $500.000, (equity), or $15,000. If the spectrusgroup pays 2 % on total, which they do, it would be 2% of $1,000,000 or $20,000. I personnally would like the extra 5 Grand.

Nevada,

Are you sure about spectrus?

I haven't called them yet, but I was just looking on the site.

They have a building for 33 million
with a min. investment of 525K

that means, I would get a 660K commission check for bringing them 525K in an investment.

Are you sure that's how their system works?

or...is it divided amongst the total number of investors which is limited to 35 in TIC transactions.

That would mean every one would receive a 18,857 commission should there be 35 investors.

$525,000 equity
+ $525,000 (roughly 50/50 LTV non recourse loan)
total $1,050,000
X 2% referral fee

seems to equate to $21,000,

if my math is correct...

With SCI : $525000 equity
X 3%

equates to $15,750

You can do what you want, though