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The Big Question TIC: What Could Go Wrong?

Jul 25, 2008
The TIC investment is one of the most popular today and for good reason, as there are many advantages that investors can receive from it. There are also many risks but the benefits definitely outweigh them. Before you get into a TIC investment yourself you should learn more about it and about TIC: what could go wrong.

TIC: What Could Go Wrong?

When it comes to the issue of TIC: what could go wrong, there are a few things that should be discussed. The rules of the TIC or 1031 exchange are very complex which is one of the major reasons that it can end up going so wrong for some investors. Real estate buying in general is about as complicated as it gets, so this is definitely not an industry for people with no patience or people who cannot keep up.

It is important that an investor never treat their investment like it is a sure thing, as though nothing could possibly go wrong, because this is never the case and there are always potential risks.

On the topic of TIC: what could go wrong, it is important to estimate the exchange risk before going through with it yourself, and consider how, for instance, even for the transactions that do not qualify for the safe harbor, the no-reference rule set in place by the IRS results in leaving the door wide open for other arrangements.

You also need to consider how much the 1031 timelines will limit your opportunities when discussing the issue of TIC: what could go wrong. In a standard exchange here the investor will usually identify between one and three different potential replacement properties within a month of closing on the relinquished property.

Once this occurs the investor then must close on at least one of the properties within 180 days of closing on the relinquished property, and this definitely creates a challenge in regards to timelines. There is never a guarantee that the investor will be able to successfully purchase any of the properties that have been identified, thereby putting them at great risk.

As long as you have taken the time to take the proper factors into consideration, have weighed out both the good and the bad about the 1031 exchanges and decided that it is in fact for you, then you should have no problems and it should turn out to be a wise investment. Having an agent work with you here will be ideal, because they are will experienced and be able to give you a hand through the process.
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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