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TIC Management Risk In Plain English

Jul 24, 2008
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.
About the Author
Kathryn R. Landry is a business writer for TIC Advisors, Inc . A company that can give you the most complete information on a 1031 exchange or TIC property ownership.
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