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Due Diligence
A tenants in common property is Real Estate sold as a security
Every potential real estate investor should remember the three most important factors in real estate are, as they say, "location, location, and location." The market of the potential
1031 property
should be studied and analyzed to determine its investment viability. Investors should consider supply and demand, rental market and vacancy trends, demographic and economic information, and investment market dynamics and forces. TIC Advisors can discuss with pre-qualified and accredited investors the results of research obtained by TIC Advisors.
The 1031-tenants in common Sponsor
The experience of the 1031-
tenants in common
Sponsor can beimportant to the success of the
tenants in common investment. Investors are encouraged to carefully consider the experience, background, financial strength, track record, and the management of the 1031-tenants in common Sponsors before investing.
Tenants and Lease Analysis
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 tenants in common property.
Pre-qualified investors can research a tenant's Company Profile, Credit Profile and the Industry Profile. To assist investors with conducting the market analyses, TIC Advisors can discuss its research that provides rental rate comparisons for competitive properties in the market and submarket of prospective tenants in common-1031 investment properties.
Economic Structure of tenants in common Offerings
TIC Advisors may assess the potential likelihood of a prospective tenants in common property.
tenants in common offerings are generally accompanied by a financial pro-forma created by the tenants in common Exchange Sponsor. However, such pro-forma should not merely be accepted at face value. One way an tenants in common
exchanger can "stress test" whether the Sonsor's key assumptions are reasonable is through comparing them to market forecast of an independent third party. Research utilized by TIC Advisors can provide a five-year market and submarket forecast on vacancies and rent growth - two important factors for projecting potential returns.
Tax Structure
To qualify for Section 1031 treatment, it is necessary that the tenants in common
offering be treated as real property and not a partnership.
An investor should ask for a tax opinion either from the Sponsor or private party.
