What is “TIC,” Tenants in Common?

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!

 

MORE FROM THE RENTAL GIRL ON TIC OWNERSHIP:

  • Read more about TIC ownership HERE
  • View all our current TIC offerings HERE
  • View The Rental Girl’s current properties for sale HERE
  • Visit Andy Sirkin’s website for more research on TIC sales HERE
    (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).
  • Interesting in purchasing a TIC? Contact an experienced TIC Realtor®

Elizabeth McDonald, Broker & TIC Specialist
liz@therentalgirl.com
TRG Realty Company, Inc.
The Rental Girl
323-313-5780 / Cell
BRE Lic #: 01449897 

ABOUT THE RENTAL GIRL & HOW WE GOT INVOLVED WITH TIC:

The Rental Girl (therentalgirl.com) is a full service Real Estate brokerage specializing in residential leasing and sales. We have been serving renters and landlords since 2004. We work with thousands of Los Angeles renters each year, and many of these renters are qualified to buy, but can’t afford or find a home in a neighborhood they want to live. In 2016, a client of ours introduced us to TIC ownership and we saw immediately how many renters and entry level buyers in LA could benefit from a TIC market here. We met with Sterling Bank, who was working actively to pioneer a TIC market in LA, and other San Francisco vendors. And so began our research on TICs. Since then, we have helped bring many TIC units to the market, and we have many new TIC communities coming soon. With every new TIC building that hits the market, more renters, landlords and realtors are discovering TIC sales and the TIC movement is growing rapidly. We love to share our accumulated knowledge, and support our real estate colleagues, landlords and renters and the TIC community. 


 

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