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What is a TIC: Call Agreement?
A TIC is a form of vesting title to property that is owned by any two individuals together but who are unmarried. Each tenant in common owns a share of the property and each tenant is entitled to a comparable portion of the income from the property. As a result they must bear an equivalent share of the expenses involved.
TIC: Call Agreement
It is important to be aware of the structure of a TIC: Call Agreement. Basically there are three different types of TIC: Call Agreement structures, which are: direct sell, master lease, and the put/call structure.
The direct sell structure can only be used when there is a single exchanger, and the master lease which is much more commonly used, holds a lot more advantages. Under this structure, owners of a TIC are paid a fixed rent, with possible annual increases as well.
Finally there is the put/call structure, under which a co-owner is able to issue an option to purchase its undivided interest.
Advantages and Risks
As with any other investment, there are certain advantages and risks that are going to be involved with a TIC: Call Agreement. A few of the advantages include pre-arranged financing, increased potential for cash flow, flexible size, professional management, and investment diversification.
The increased potential for cash flow is one of the most major and most favored advantages, as many investors have owned property for years and are still not earning a decent rate of return on their equity. Also, most of the sponsors of this loan have internal management departments, and property management services are a component of the offering.
As for risks, this includes capital call potential, transaction expenses, closing, limited control, and non-recourse loans.
It is important before going through with a TIC: Call Agreement that you take the time to be aware of all these advantages and risks, and ensure that it is going to be a smart decision for you. The best idea is to speak with a tax consultant beforehand, who is experienced and knowledgeable in this area to assess your current situation.
They will be able to ensure that you understand all that is involved and that you will be profiting in at least some way by going through with the TIC: Call Agreement before you enter into it.
There are many different investments to choose from but this is definitely one that holds numerous beneficial offerings.
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