TIC Properties

The tenant-in-common (TIC) form of ownership for real estate investment of 1031 exchange funds was present prior to 2002 but until the IRS’s release of Revenue Procedure 2002-22, TIC sponsors relied on legal opinion to defend the viability of TIC properties for exchange proceeds. That all changed with the Rev Proc, which provided guidelines clarifying the parameters required to qualify TIC interests as replacement property in a 1031 exchange. Subsequently, TIC investments quickly gained popularity among 1031 exchange investors seeking passive income. With minimums as low as $50,000, investors were able to diversify into multiple TIC properties. TIC properties allowed 1031 exchangers to participate in properties typically available only to institutional buyers.

Since 1997, the principals of Realtynet Advisors have assisted 1031 exchange clients invest in 3rd party TIC properties leased to national tenants who guarantee the lease and are responsible for the property’s operating costs. In 2002, Realtynet began to sponsor their own TIC properties, becoming one of the nation’s first TIC sponsors.

With the financial crash of 2007-2008, the number of exchanges diminished and most TIC sponsors either went out of business or turned their attention elsewhere. With the resurgence of 1031 exchanges in recent years, the need for diversification, security, and passive income has motivated real estate companies to offer replacement property to 1031 exchangers. Instead of utilizing the pre-crash TIC form of ownership, sponsors have chosen the Delaware Statutory Trust (DST) structure, which provide similar benefits to TICs.

DST replacement property has many advantages to consider, but DSTs are only available to accredited investors (high net worth or annual income). Therefore, Realtynet Advisors provides 1031 investors who do not meet the accredited investor standard, yet seek secure monthly income without the ongoing management hassle or expense, access to properties from the handful of active TIC sponsors.