Triple Net Lease

Tenants In Common
A new and innovative approach to real estate investing has appeared in recent years. An alternative to sole ownership of real estate is an investment in a single large commercial property by multiple owners, not as limited partners or as an entity, but as individual owners. Each owner receives an individual deed at closing for his or her undivided percentage interest in the entire property. This form of ownership is known as co-tenancy or tenants-in-common ("TIC"). Each owner has the same rights as would a single owner.
A TIC Replacement Property enables the average investor to participate in an echelon of real estate previously reserved for large institutional investors. TIC Replacement Properties are chosen because they provide credit-worthy tenants, secure monthly income, stability, and growth potential. Investing in a TIC Replacement Property provides passive long-term income, eliminates active property management and alleviates the burden of being a landlord. Now the average person can own property leased to a Fortune 500 company, a national or regional retailer or the United States Government.

1. Low Minimum Investment
   It is estimated that 50% of all 1031 exchanges involve capital amounts of $250,000 or less. The price of admission to the triple-net lease market typically begins at $1,000,000, thereby locking 50% of 1031 investors out of this arena. TIC ownership is available with as little as $50,000.
2. Diversification
   In a typical 1031 exchange, the taxpayer will identify three potential replacement properties and subsequently purchase only one. TIC ownership makes it economically feasible to identify and acquire ownership interest in three properties instead of one, thereby decreasing risk through diversification. Partial ownership of several different types of properties in several different locations can bring greater stability to future income, much as diversification in stocks minimizes risk to investors.
3. Flexibility
   By identifying a TIC Property as one of the replacement property choices, the taxpayer's entire proceeds can be applied to the TIC property if the other choices fall through, or the taxpayer can invest the "spill-over" money in the TIC property if there is money left unspent after another closing.
4. Decreased Tax Risk
   Because an investment position in a TIC property can be reserved for a period of time after the identification period, the potential for paying capital gains tax because of a collapsed deal is decreased. In addition, reinvesting all 1031 proceeds into TIC properties creates the opportunity to identify as many as 6-10 properties instead of the customary 3 during the 45-day period, putting the investor in a much more secure position for the exchange.
5. Existing Financing
   Typically, TIC properties already have financing in place and can be assumed without qualification or loan assumption fees.
6. Speed
   By eliminating the loan qualification process, credit checks and appraisal work, and because the negotiation process is eliminated, a TIC property closing can easily take place during the 45-day identification period, thereby eliminating the risk of running out of time. A TIC closing can take place within days of identification.
7. Liquidity
   Splitting the proceeds from a 1031 exchange into several TIC properties can present the opportunity for greater liquidity of assets for future cash or investment needs. If there is a debt carryover into the exchange, all the debt can often be moved into one replacement property, leaving remaining funds free for a couple other debt-free properties. It also presents the opportunity to identify as many as 6-10 properties instead of the customary 3 during the 45-day period, putting the investor in a much more secure position for the exchange. In addition, many TIC properties have buy-back provisions from the seller.
8. Simplicity
   A TIC investor receives a monthly check without having to bother with the day-to-day management of their investment.