What is “TIC,” Tenants in Common?

Are you renting in Los Angeles with dreams of buying one day?

Are you feeling priced out of the Los Angeles real estate market?

Do you feel your rent payment is too high and equal to what a mortgage payment would be? 

Have you tried to buy, written offers on properties but gotten out-bid each time? 

IF SO, YOU’LL WANT TO CHECK OUT
TENANTS IN COMMON (TIC)!

A new market is emerging in Los Angeles that allows apartment units to be bought and sold individually, like condos. It’s called “Tenancy-in-Common” or Tenants-in-Common (TIC). And it’s spreading rapidly in LA.

TIC units are often 10-15% less than comparable condos, often sell at list price and without bidding wars, and often have lower HOA dues than condos – making homeownership a possibility for many of our renters who would normally not have the opportunity to buy.

 So what exactly is Tenants in Common?

Tenants in common is a way to hold title. When you buy a TIC unit, you’re actually buying a fraction of the ENTIRE property, but with exclusive rights to ONE unit. Let’s use a 4-unit apartment building as an example:

If you buy a TIC unit, (Unit A) in a 4-plex:

• You are buying 25% of the whole property
• You have exclusive rights to Unit A, and Unit A’s parking space and storage
• There will be 3 other owners of the whole property, each owning 25% of the building
• All 4 of you will split common expenses equally (such as gardener and water)

Sounds like a condo, right? That’s because it is very similar to owning a condo. But the difference is how title is held: on title, instead of owning 100% of a condo unit, you own 25% of a building as “Tenants in Common” with the other 3 owners, who also each own 25% of the building.

Ok, so what’s the catch? The only catch is your loan options. Unlike purchasing a condo, where you can walk into any bank and get a loan for it, you lending options are limited. Most conventional lenders do not want to lend on a “fraction” of a property. So, you need to use a lender who is willing to give you a loan on 25% of a property.

TIC sales are spreading rapidly in LA, largely due to the fact that we now have a lender who is offering individual fractional loans on TIC units. You can now get your own “fractional loan” on your individual TIC share and unit.

PLEASE NOTE: If you google “Tenants in common” you may find some articles referring to a TIC “group loan.” Back in the day, TIC buyers would have to get on one loan together, similar to a co-op loan. However, this is old-school TIC information and should be ignored. Now, you can get your own “fractional” loan, and not be tied to the other buyers in the building. If your neighbor stops paying their mortgage, the lender will foreclose on their share only, and it will NOT affect you! Sounds more like a condo now, right? Again, it’s very similar to a condo!

Are you interested in finding out more about purchasing a TIC unit?

Visit therentalgirl.com for more info on TIC sales

Visit Andy Sirkin’s website for more research in TIC sales
(Andy is the TIC attorney who pioneered TIC sales in the early 80’s in San Fran. His website has a wealth of info on TIC ownership).

Or contact us more info!

 

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from theokbrowne digest http://rentinginla.com/tic-tenants-common/