Tenants in Common (TIC) Loans
Looking at purchasing a TIC condo? Sterling was one of the first to develop Tenants in Common (TIC) loans in the San Francisco Bay Area. And they are the first to offer them here in Los Angeles.
415-990-5620 – Cell
916-812-4800 – Cell
If you’re looking to buy a Tenant in Common (TIC) unit, you have 3 options for financing:
- Get a loan through a lender who offers TIC fractional loans
- Buy all cash
- Or, the old way of doing things is to get on a group loan with all owners in the building (NOTE: this option is pretty much obsolete now, and all our current listings will not have this option)*
*NOTE that option 3 is obsolete. As you do your research on TIC sales online, you will read about “group loans” and the problems that come with a group mortgage, so it’s worth mentioning. When TIC sales first started back in the 80’s, group loans were the only option for financing. A group loan is when there is one loan for the whole property, and each individual buyer is on this same loan. In the 1990’s, banks started to realize there was a market for TIC fractional loans and started offering them to consumers. Now, individual TIC fractional loans are much more prevalent. There are a handful of lenders in the Bay communities offering fractional loans. One of them, Sterling Bank, has ventured to Los Angeles and is now offering TIC loans here. We are anticipating more lenders in the near future, as TIC sales become more prevalent.
Unless you are all cash, you will need to get a loan and Sterling Bank is currently the one lender offering TIC fractional loans in Los Angeles.
IF YOU ARE ALREADY PRE-APPROVED FOR A LOAN WITH ANOTHER LENDER, CAN YOU USE YOUR LENDER TO PURCHASE A TIC?
Unfortunately, you won’t be able to. Here’s why: When you purchase a TIC unit, you are purchasing a fractional interest (one unit) in multi-unit building (I explain in more detail below). Most lenders, such as Chase, Wells Fargo, Bank of America, etc. want to loan on 100% of the property, and are not willing to loan on a fraction of a property.
What is fractional ownership? If you are purchasing one TIC unit in a 4-plex, you are purchasing 25% interest in that building, with exclusive rights to occupy one specified unit. We call this “fractional ownership” because you are buying a fraction of one building. In the 1990’s, a few lenders started to realize there was a market for “fractional ownership” up in San Francisco, and started to offer Fractional loans. Since then, more have joined and currently there are a dozen or so lenders in the Bay area offering these fractional loans. Currently, one of these lenders, Sterling Bank, has ventured to Los Angeles and is offering Fractional loans here. We have been working with other lenders, and know that more are on their way.
SIDE NOTE: Your lender may tell you that they can help you with a Tenants in Common purchase. If this is the case, go back and clarify to them that this is a Tenants in Common with exclusive rights to occupancy, and requires a fractional loan. Your lender probably is assuming you are purchasing the property with another friend, partner or family member, and wanting to get a group loan with everyone on the loan, and holding title as Tenants in Common. Make sure they understand that the loan will be a fractional loan. Feel free to conference us on the call, or have your lender call us for clarification.
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
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.