TIC Due Diligence

A TIC is Real Estate

Fundamentally, despite the complex paperwork and references to “securities” a TIC property is real estate. Every potential investor should remember that the three most important factors in real estate are “location, location and location.” The market of the potential property should be studied and analyzed to determine its strength. Investors should consider supply and demand, rental market and vacancy trends, demographic and economic information, investment market dynamics and forces.

The 1031-TIC Sponsor

The experience and success of the TIC Exchange Sponsor is critical to the success of the TIC investment. TIC Advisors will help you analyze the Sponsor’s management credentials, past TIC-1031 performances, corporate business plan, financial strength, acquisition experience, property/asset management experience, and legal and accounting representations. Visit our Sponsor Research Center to learn more about our available TIC Exchange Sponsors or contact one of our 1031 Exchange Specialist.

Tenant and Lease Analyses

The credit-worthiness of the tenant(s), the lease terms and rates, comparable leases, and the condition of the market should be analyzed before investing in a property. Our clients can research a tenant’s Company Profile, Credit Profile and the Industry Profile. To assist you with conducting the market analyses TIC Advisors will supply you with The Reis Asset Advisor that provides you with rental rate comparisons for competitive properties in the market and submarket of your prospective TIC-1031 investment property.

Economic Structure of TIC

TIC Advisors will help you assess the potential likelihood of a prospective property. All TIC offerings are accompanied with a financial pro-forma created by the TIC Exchange Sponsor. However, such pro-forma should not merely be accepted at face value. TIC Advisors will help you analyze the likelihood of the stated pro-forma being achieved. One way we help our clients “stress test” the reasonableness of the Sponsors key assumptions is through comparing them to market forecast of an independent 3rd party. The Reis Asset Advisor that is supplied to our clients provides a five year market and submarket forecast on vacancies and rent growth, the two most significant factors of projected returns.

Tax Structure

To qualify for Section 1031 treatment, it is necessary that the TIC be treated as a tenancy in common and not a partnership. A potential investor should ask for a tax opinion on the Exchange either from the Sponsor or private party. TIC Advisors can help you locate a knowledgeable and experienced tax advisor that specializes in 1031 Exchanges. Our commitment is to empower our clients with valuable information to better help them make informed decisions. If you have any questions about performing due diligence for TIC programs, please give us a call.