What Are The Risks and Benefits

of Tenant-In-Common Real Estate Investments?

Trade Taxes, Tenants and Toilets for Time, Tennis and Travel

• Eliminate Active Management. Tenant-In-Common investments provide simplicity by eliminating active property management headaches. Individuals who are tired of the day to day burdens of being a landlord will appreciate the time freedom they experience with Tenant-In-Common investments.
• Simplifies 1031 Exchanges. A ready inventory of Tenant-In-Common properties allows individuals to easily identify properties within the 45 day identification period, acquire within the 180 days or have a “backup” property in case their preferred real estate falls through.
• Defer capital Gains Tax. Tenant-In-Common investments allow the investor to defer the capital gains tax on the sale of their investment property as long as they successfully adhere to the I.R.S. 1031 Exchange guidelines.
• Minimum equity requirements as low as $100,000 allow you to invest in multiple high quality, institutional grade properties.
• Pre-Packaged Investments. Tenant-In-Common opportunities are often “packaged” with management and financing in place.
• Faster Process - Investors generally find investing in Tenant-In-Common investments a much faster process because the deal is already closed and funded through a sponsor and all the information needed to make a well informed decision in evaluating any given opportunity is readily available for review to an accredited investor. Once an investor has made their selection(s), the funding process usually only takes a few days. This feature is particularly beneficial when doing a 1031 Exchange as the restrictive timelines the IRS gives investor is only 45 days to identify a property and 180 days to close. Although this may seem like reasonable periods of time, it often times is not.
• Geographic and Asset Class Diversification. Fractional ownership provides you with the ability to diversify your direct investment or 1031 tax free exchange into more than one property and participate in potentially larger institutional-quality properties. Thus, small accredited investors in one area of the country may participate in large industrial, commercial, and residential property investments all around the country with professional management.
• Access to Institutional Quality Real Estate from over 30 of the Nations leading real estate sponsors that structure Tenant-In-Common programs.
• Non-Recourse Financing. Accredited investors assume non-recourse (no personal guarantee) financing on the existing property.
• Potential Increase in Income. Cash flow is generally paid monthly and is tax sheltered via depreciation pass through and interest deductions. You may also share in the appreciation of the property.
• Tenant-In-Common Sponsors typically have a vested interest in the performance of the property.
• Sponsors do a lot of "heavy lifting" in acquiring (identify and locate, evaluate, arrange financing, etc.), managing (maintain, lease, collect rent, service mortgage), and selling the Tenant-In-Common properties. These National real estate companies structure Tenant-In-Common programs, acquire (identify and locate, evaluate, arrange financing, etc.), manage (maintain, lease, collect rent, service mortgage), and sell the Tenant-In-Common properties.
• Sponsors usually have strong track records and extensive experience in various sectors, types, and locations of real estate.
• Each offering is required to have a thorough prospectus or Private Placement Memorandum (PPM) giving extensive data on each deal. Investors can therefore avoid time consuming negotiations and focus on evaluating the properties and doing their due diligence. Moreover, each offering comes with a , which details the specific aspects of each offering. Thus, Tenant-In-Common investments offer superior efficiencies in the identification, acquisition, financing, closing and operating of real estate ownership.
• Institutional Properties - Real estate investors now have the opportunity to invest in large institutional trophy properties that larger institutional investors have enjoyed for years. These properties are available in a variety of asset classes and geographic locations across the county. A whole new market is now available to the accredited real estate investor and the opportunity to buy into these is a major reason Tenant-In-Common investments are so popular.
• Flexibility - One of the difficulties in completing a 1031 Exchange is matching the debt and equity portion of the exchange with another replacement property. Investors frequently found this aspect a problem because it limited the number of properties they could look at. Many times 1031 Exchange investors found themselves having to buy a larger replacement property which required additional monies, from their own pocket, to the new property transaction. Other times investors could only find a suitable replacement property that was less than the value of their exchanged property; which meant they were left with “boot” and required to pay some of the capital gains tax anyway. With a Tenant-In-Common investment, investors are able to be flexible with their capital investment as long as they meet the minimum equity requirements; thus giving them a great deal of flexibility in these transactions.
• The Tenant-In-Common structure tapped into the pent up demand many real estate investors had for a number of years. The restrictive IRS 1031 Exchange timelines caused many investors such angst they literally sat on the sidelines with their properties and watched good markets and solid offers pass them by because the options of paying the taxes or finding another replacement property with a 1031 Exchange were unappealing. Since 2002 investors have found Tenant-In-Common investments popular.

Risks to Tenant-In-Common investments...

Are there disadvantages to owning Tenant-In-Common Investments?

Yes, as with all investments, there are risks associated with Tenant-In-Common ownership. Owning fractional interests in real estate may add to the illiquidity of the investment. Further, the cost to acquire Tenant-In-Common interests may be higher than sole ownership given the expense of making the property available to multiple co-owners in a structured investment.

Why don't I see Tenant-In-Common investments advertised on TV or in newspapers or magazines?

Most Tenant-In-Common investments (and all of our investment offerings) are private offerings under Regulation D of the Securities act of 1933. These types of offerings are nonpublic offerings, thus general solicitation and advertising is prohibited. The investment is directed only to affluent or “accredited” investors. Scott Friedson, a principal of National Income Property, holds securities registrations to offer Tenant-In-Common investments.

What is the minimum investment?

Typically, the minimum Tenant-In-Common real estate investment is $250,000-$300,000, but it can be as low as $100,000. Oil and Gas minimum investments are $100,000.

What are the risks associated with Tenant-In-Common investments?

Like any investment, Tenant-In-Common investments are not without risk. First, owning fractional interests in real estate may add to the illiquidity of the investment. Currently, there is no secondary market for Tenant-In-Common real estate investments. Second, the costs to acquire Tenant-In-Common interests may be higher than sole ownership, given the expense in making the property available to multiple co-owners in a structured investment. Third, like any real estate investment, the property may depreciate. Fourth, cash flow may be interrupted if a tenant fails to pay rent or a replacement tenant is not found when an existing tenant moves out.

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