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What is a Tenants-in-Common (TIC) Investment and is it suitable for you?


What is a Tenants-in-Common investment? 

A Tenants-in-Common investment (also known as a tenancy-in-common or TIC) is an arrangement in which two or more people share ownership rights in a property or parcel of land.

It’s important to understand the potential risks, costs, and advantages of a TIC before investing. Generally offered as a 1031 exchange tax deferral, financial professionals often misrepresent the risks and benefits of these investments. Moreover, the investments –due to the attractiveness of the income offered by the investments –are often marketed to conservative and retired investors.

How does a TIC Investment work?

Tenants-in-Common (TIC) refers to an investment made by the taxpayer in real estate which is co-owned with other investors. Since the taxpayer holds deed to real estate as a tenant in common, the investment qualifies under the like-kind rules of § 1031.

Essentially, the way that a TIC investment works is as follows:  After acquiring a property, the TIC sponsor markets and sells interests in the property to investors (at a markup), with the sponsor then reducing its own interest in the property to a small fraction or zero as its interest are sold off to the investors.  A second entity is then formed by the sponsor to enter into a lease agreement with the investors, pursuant to which the investors become the landlord of the subject property and the second entity becomes the property manager.  The Lessee would then sub-lease the property to tenants and, in theory, pay the promised income to the owners.

Various broker-dealers have been used by TIC sponsors to market and sell interests in these investments to the unsuspecting public and were compensated (handsomely) by these sponsors through the form of commissions.

Delaware Statutory Trust (also known as a DST) goes hand-in-hand with TIC investments, with slight differences. A DST is a separate legal entity formed as a trust under the law of Delaware in which each owner has a “beneficial interest” in the DST for income tax purposes and is treated as owning an undivided fractional interest in the property. Recently, DSTs have been gaining in popularity for a number of reasons including being able to secure financing more readily and attract more investors with lower minimum investments amounts.

What are the benefits of Tenants-in-Common investments?

The primary reason someone would want to get into a TIC investment is the tax benefits, known as the 1031 exchange, they would receive. Under the Like-Kind Exchange IRC Code § 1031: “Whenever you sell business or investment property and you have a gain, you generally have to pay tax on the gain at the time of sale. IRC Section 1031 provides an exception and allows you to postpone paying tax on the gain if you reinvest the proceeds in similar property as part of a qualifying like-kind exchange. Gain deferred in a like-kind exchange under IRC Section 1031 is tax-deferred, but it is not tax-free.” Eventually you do have to pay the taxes, but a 1031 exchange allows you to delay those taxes until later down the road.

What are the risks of Tenants-in-Common Investments?

TIC investments come with several risk factors that you should be aware of:

  • While the investor is often focused on avoiding the Capital Gains Tax, they do not think about the fact that TIC properties may be owned by up to 35 people, (and no limit with a DST). This is an inherent problem because a unanimous consent of all tenants is necessary to make decisions like selling, leasing, and refinancing.
  • TIC investments are almost always illiquid. This can create a number of problems.  For example, if one of the TIC owners has a life altering event occur they can’t just liquidate their interests.  They have to wait until the decision to sell is made by all or the majority (depending on the TIC structure) is ready to sell.
  • Your broker may be recommending a TIC for his own interests. Financial advisors should have their client’s best interest as a first priority. Unfortunately, that is not always the case as TIC investments pay unusually high sales commissions to the advisors. This may lead to a conflict of interest. The question becomes, did my advisor recommend this TIC because he/she thought it was a great investment and fit my needs or were they more interested in the 5-10 percent commission they are making on this sale?
  • Most TIC investments are also highly leveraged, borrowing enormously to acquire the properties.  This means that the TIC investment runs the risk of default with even the smallest of market fluctuations.

TIC Investment Sponsors 

A TIC Sponsor is an individual or entity that locates properties to buy ‘wholesale,’ then packages it, and sells it to multiple investors at a ‘retail’ price. The multiple investors hold a title as ‘Tenants in Common’. The difference between the wholesale and retail price is what the sponsor is earns for their services. Typically this is between 5-7% percent of the total value of the investment, according to TM 1031 Exchange.

The sponsors often make the investments sound too good to be true – income producing, no hassles, great properties.  The sponsors usually even provide glossy marketing materials showing the properties and forecasting great prospects.   Notwithstanding these representations, TIC investments remain extremely high-risk, in large part due to the enormous commissions being paid out to the sponsors, brokerage firms, and financial advisors, which can eat in to any profitability the investments may have had.

Common TIC Sponsors

There are a number of companies that sponsor TIC and DST investments, including the following:

American Capital Group:

Addison Greens Apartment Associates LLC
Highlands at Spectrum Apartments LLC
The Dakota Apartments Associates LLC
Sterling Pointe Apartment Associates LLC
Monticello apartments Associates LLC

Cabot Investment Properties:

Cabot East Town Acquisition LLC
Cabot Ashtabula Acquisition LLC
Cabot Creekside Acquisition LLC
Cabot Golf CL-PP Acquisition LLC
Cabot Northpark Southland Acquisition LLC
Cabot Turfway Ridge ACQUISITION LLC

Cottonwood Capital, LLC:

Cottonwood Blue Swan S LLC
Cottonwood Copperfield S LLC
Cottonwood Arbors S LLC
Cottonwood Gables S LLC
Cottonwood Oakridge S LLC
Cottonwood Regatta S LLC
Cottonwood West Town S LP

Covington Realty Partners

Covington First Colony Commons
Covington Dardenne Acquisition LLC
Covington Gateway Station Shopping Center Phase II
Covington Lansing Acquisition LLC

Desanto Realty Group

DRG Cason Estates LLC
DRG Clearview LLC
DRG Cypress Medical LLC
DRG Fox Chase LLC
DRG Hendersonville LLC
DRG Hunter’s Chase LLC
DRG Northwoods Crossing LLC
DRG Pennbrook LLC
DRG Perry’s Crossing

Direct Invest LLC:

Direct Invest- Riverbend Executive park LLC
Direct Invest- 116 Invest Highway LLC
Direct Invest -Delmar LLC
Direct Invest- Winding Brook drive LLC
Direct Invest- 246 Omini Way LLC
Direct Invest- 2810 North Parnham Road LLC
Direct Invest 500 East Main LLC
Direct  Invest- Heron Cover LLC
Direct Invest -Braintree Park LLC

Gemini Real Estate Advisors, LLC:

Gemini Brandon S TIC – Brandon LA Fitness Shopping Center
Gemini 442 West 36th Street S LLC TIC  Comfort Inn (NYNY)
Gemini Diamond Run S LLC -TIC Diamond Run Mall
Gemini Johnstown Galleria S LLC- TIC Johnstown Galleria
Gemni Rio Norte S LLC- TIC Rio Norte Shopping Center
Gemini Rowlette Crossing S LLC – TIC Rowlette Crossing Shopping center
Gemini Tinley Park S LLC – TIC Tinley Park LA Fitness

Griffin Capital Corporation:

Griffin Capital Bolingbrook Investors LLC
Griffin Capital Independence Investors LLC
Griffin Capital Palomar Investors LLC
Griffin Capital Westmont Investors LLC
Griffin Capital Redwood Investors LLC

Inland Real Estate:

Charlotte 1031 LLC
Olivet Church 1031 LLC
Glenview 1031 LLC
Dublin 1031 LLC
Houston 1031 LLC
Plano 1031 LLC
Eden Prairie 1031 LLC
Waukesha 1031 LLC
Tampa Coconut Palms Office Building 1031 LLC
Geneva 1031 LLC
Memorial Square 1031 LLC
Countrywood 1031 LLC
Carmel Office 1031 LLC

Cornerstone Real Estate Investment Services

Kay Properties & Investments LLC
According to Kay Properties’ website, the following is a list of current offerings:

Kay Properties & Investments FedEx Ground DST – Brookings, OR

Kay Properties & Investments Wal-Mart DST – Fayetteville, NC

Kay Properties & Investments Alexander Pointe Apartments DST – Orange Park, FL

Kay Properties & Investments Seacoast DST – Chesapeake, VA

Kay Properties & Investments Interchange DST – Riverview, FL

Kay Properties & Investments Maple Springs Apartments DST – Richmond, VA

Kay Properties & Investments Dallas Medical Office DST – Dallas, TX

Kay Properties & Investments Raleigh Pediatrics DST – Raleigh, NC

Kay Properties & Investments Innsbrook DST – Richmond, VA

Kay Properties & Investments Shannon Oaks DST – Cary, NC

Kay Properties & Investments Battlefield Technology Center DST – Chesapeake, VA

Kay Properties & Investments Brandywine DST – Fayetteville, NC

Kay Properties & Investments Charlotte Corporate Center DST – Charlotte, NC

Kay Properties & Investments Ashley Corporate Center DST – N. Charleston, SC

Irexa Financial Services Wealth Strategies
According to Irexa Financial’s website, the following is a list of current offerings:

Irexa TSWR Development SWD Portfolio I, DST – Texas

Irexa SL-FL NNN Industrial Portfolio I, DST – Florida

Irexa CSRA Grocery Portfolio II, DST – North Carolina

1031 Exchange Properties

According to 1031 Gateway, the following is a list of current offerings:

 Coeur d’Alene ARC CVS Portfolio

Coeur d’Alene Chicagoland Multifamily

Coeur d’Alene Net-Leased Portfolio 2

Coeur d’Alene Net-Leased Portfolio 3

Coeur d’Alene Net-Leased Portfolio 4

Coeur d’Alene Net-Leased Portfolio 5

Coeur d’Alene Post Ladera Palms

Coeur d’Alene ARC Bridgestone Portfolio

Coeur d’Alene National Oilwell Varco

Coeur d’Alene National Oilwell Varco 2

Coeur d’Alene New York Grocery

Coeur d’Alene Post Regal Crossing

Coeur d’Alene Desert Sky Station

Coeur d’Alene Keaau Macadamia Nut Orchard

Coeur d’Alene Shops at Lindsey & Main

Coeur d’Alene Garden Park Apartments

Capital Real Estate
According to Capital Real Estate’s website the following is a list of current offerings:

Capital Real Estate Palm Trails Apartments – Chandler, AZ

Capital Real Estate Sevilla Apartments – Tempe, AZ

Capital Real Estate Mandarina Apartments – Phoenix, AZ

Capital Real Estate Dwell Apartments – Scottsdale, AZ

Capital Real Estate The Buttes – Loveland, CO

Capital Real Estate City Square – Denver, CO

Capital Real Estate Copper Ridge, Louisville, CO

Capital Real Estate Villa at Mountain Vista Ranch – Surprise, AZ

Capital Real Estate Heights on Huron – Northglenn, CO

Capital Real Estate The Flats at Pinecliff – Colorado Springs, CO

Capital Real Estate Vista Park – Aurora, CO

Capital Real Estate Skyway Village – Colorado Springs, CO

Capital Real Estate Falls at Lakewood – Lakewood, CO

Capital Real Estate Highland Way – Northglenn, CO

Capital Real Estate Bellaire Ranch – Colorado Springs, CO

Capital Real Estate Aura at Midtown – Phoenix, AZ

Capital Real Estate Sunset Peak – Thornton, CO

Capital Real Estate Monaco South – Denver, CO

Capital Real Estate Ponderosa Ranch – Tempe, AZ

Capital Real Estate Springs at Alta Mesa – Mesa, AZ

Capital Real Estate Alturas at Bellaire Ranch – Colorado Springs, CO

Capital Real Estate Omnia McClintock – Tempe, AZ

Capital Real Estate Pavilions at Arrowhead – Phoenix, AZ

Capital Real Estate Gateway on Gilbert – Mesa, AZ

Capital Real Estate Omnia on 8th – Tempe, AZ

Is a Tenancy-in-Common investment suitable for you?

Your financial advisor should only recommend investments that are suitable for their clients. The financial advisor should conduct a suitability analysis on a holistic level. Liquidity needs, time horizon, risk tolerance, age, income, are just a few categories an advisor should take into account prior to recommending any investment. Once that is completed the brokerage firm must ensure that due diligence was completed at every level of each investment.

In 2005 FINRA issued multiple notices reminding brokerage firms that they cannot recommend TIC based only on the information they received by the sponsoring company. As a matter of fact, the Firm is legally required to conduct a “reasonable investigation” of their own accord to confirm there is no misrepresentation on the sponsors end. These safe guards are in place to protect the investor, but unfortunately sometimes they are overlooked.

Filing a Complaint against your Brokerage Firm

The foregoing information, which is all publicly available, is being provided by The White Law Group.

If you have suffered losses as a result of a financial advisor’s misleading representations of a TIC or DST investment, the securities attorneys of The White Law Group may be able to help you recover the investment losses through FINRA arbitration.

For a free consultation with a securities attorney, please call 888-637-5510.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington.

For more information on the firm and its representation of investors in FINRA arbitration claims, visit


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