Tools & Investment» Quick Reference
Tenant In Common FAQ's
What is a Tenant In Common (TIC) fractionalized co-ownership?
Is the (TIC) fractionalized co-ownership only for 1031 Exchanges?
What are the benefits of a fractionalized co-ownership?
Is the co-ownership new and how big is the market in the US?
Who is a Tenant In Common (TIC) co-ownership fractional-deed seller?
What are Heaven Investments Holding Corp. credentials?
How can Heaven Investments deliver such higher returns?
Can Heaven Investments meet my 1031 Exchange deadlines?
How does one qualify to participate in a fractional-deed property?
What is the minimum investment?
Does Heaven Investments invest its own funds in the acquisition?
How many co-owners are involved in each property?
Who handles my 1031 Exchange funds?
Do I have to acquire a loan?
What is the role of a co-owner?
Does Heaven Investments stays involved with the project after the close?
Who manages the property?
How is the property leased?
How rental revenue funds from the lessee distributed?
Do the co-owners have to come up with more if there is a cash call?
When and how does the exit Strategy work?
How am I protected if one of the co-owners get in any kind of trouble?
Who should I contact if I have a question that is not covered here?
What is my next step if I am ready to acquire fractionalized co-ownership?
What is a Tenant In Common (TIC) fractionalized co-ownership?
A Tenant In Common (TIC) fractionalized co-ownership refers to real estate owned by a group of related or unrelated individual buyers, each with a fractional-deed co-ownership interest.
Is the (TIC) fractionalized co-ownership only for 1031 Exchanges?
TIC fractionalized co-ownership is good with any Real Estate Investment Strategy, like Cash, 401 K, IRA, Equity Line on Real Estate Owned, and now even 1031 Exchanges. (Please see “FAQ – 1031 EXCHANGE”)
What are the benefits of a fractionalized co-ownership?
It's a viable strategy for an individual buyer to own fractional interest in a larger property, which on their own they may not be able to acquire. This strategy can provide stable, institutional-quality real estate asset and income, without necessarily the headaches of hands on management, and minimization of risk due to higher quality and large revenue volume of the property. Co-owners share the tax and wealth preservation benefits just as of a sole-owned real estate, the same or better cash flow, and long-term appreciation potential.
Is fractionalized co-ownership new and how big is the market in the US?
The fractionalized co-ownership is an old strategy that has been utilized by friends, family and promoted in closed affluent circles. Since 2002 when the IRS issued new guidelines for 1031 exchanges the market just exploded. The advantages of this strategy far out weighted the drawbacks, as, in just 4 years, the market has grown to $15 Billion annually. (Please see “FAQ – 1031 EXCHANGE”)
Who is a Tenant In Common (TIC) co-ownership fractional-deed seller?
A company, like Heaven Investments, that acquires real estate as a principal, develops it and then offers it for co-ownership to buyers including 1031 Exchange buyers. (Please see “FAQ – 1031 EXCHANGE”)
What are Heaven Investments Holding Corp. credentials?
Our founder’s family has been in real estate development since the early 1950’s, continuing the legacy, knowledge and experience to now the 4th generation. Heaven Investments was formalized as a California ‘C’ Corporation in 2000 and since then we have developed over 200 properties. We have served hundreds of buyers in the last 7 years with quality properties and have consistently delivered the highest returns in the country year after year. Our Group is positioning and is on its way to becoming a national real estate investment and Development group.
How can Heaven Investments deliver such higher returns?
Heaven Investments principal’s legacy and history is that of a Real Estate Investor and developer with deep knowledge and understanding of the industry. Our projects are NOT based on ‘Speculations’ but on clear cut development methodologies. We only acquire quality properties based on the added value equity we can develop which has Economic and Marketing Feasibility based on ‘current’ Fair Market Prices. Margins are built in to account for market slowdowns and price rollbacks. We do not ‘Speculate’ with the HOPE that the property will ‘appreciate’. We build the “Appreciation”. Also…………….as the projects are sold to Tenants In Common at values that are NOT ‘Padded’ with “additional” services fees and costs, amounting to nearly 15 to 20 % of the cost of the project, we are able to pass that on to the new owners as Tenants In Common, which, becomes part of the ‘higher returns’ we deliver. (Please see “FAQ- PROPERTY ACQUISITON CRITERION”)
Can Heaven Investments meet my 1031 Exchange deadlines?
Since the property are usually already owned by us or our affiliates, and the transfer of fractionalized portions of those properties to individual like yourself are not dependent on others to close, we are at liberty to close your transaction at free will and are only dependent on ‘your’ needs and requirements.
How does one qualify to participate in a fractional-deed property?
Qualifications of the individual vary depending on either the outright transfer of fractional-deeded property, or the continuation of a managed property. Heaven Investments typically works with individual of all levels, depending on their needs, requirements and position on the financial spectrum, ones with limited funds to ones that have unlimited funds, the first time home buyers to high-net-worth individuals experienced in owning income property and those wishing to complete a 1031 Exchange or TIC transaction. We work very closely with individuals as each individual has their own special needs, wants requirements and desires.
Are there minimum investment requirements?
It varies depending on the size of the value of the property, the loan components, and the cash requirements at any given time. Typically the minimums start from $50,000 with no upward limits. The minimum may be lowered depending on the property and requirements at that time.
Does Heaven Investments invest its own funds in the acquisition?
Heaven Investments invests from 10% to 100% to purchase properties sometimes partnering with individuals for acquisition. We then remain as one of the co-owners in the eventual Tenant In common fractionalized co-ownership.
How many co-owners can participate in the ownership of a property?
As few as 2 and as many as 35, but typically around 30.
Who handles my 1031 Exchange funds?
Funds move from the co-owner's 1031 Accommodator directly to the purchase escrow account. Heaven Investments provides the assistance and paperwork to complete the exchange but is never involved in handling co-owner's 1031 Exchange funds. (Please see “FAQ – 1031 EXCHANGE”)
Depending on the individual property and its specific funds requirements, some have and some don’t have loan components. You may have to acquire a loan for your pro rata share. With the exception of standard carve-outs, the loans are typically non-recourse.
What is the role of a co-owner?
The Tenant In Common Agreement more or less dictates the role of a co-owner. Most major decisions are made by a vote by the co-owners, which eventually dictates the role of the co-owners.
Does Heaven Investments stay involved with the project after the close?
As we most times and progressively retain a partial equity in the property after the close, we become a co-owner with the same rights and responsibilities as any other co-owner. Heaven Investments has no control of the property after the sale closes.
Depending on the property and the conditions surrounding the number and type of lessee’s, either the property is already leased, and if not then Tenants In Common handle the leasing in house or a property management firm (or an assignee) may be appointed and would handles the leasing in accordance with the requirements parameters provided approved by the co-owners.
How rental revenue funds from the lessee distributed?
Co-owner receives a pro-rata share of the monthly income, tax benefits, and appreciation. Co-owners are paid directly by the Lessee’s or property management company, subject to property performance.
Do the co-owners have to come up with more if there is a cash call?
This could occur, though sufficient reserves are set aside for each property to avoid such an occurrence. Most of our properties are structured so that cash call if any are minimal and contingencies are in place to address the situation without the co-owners having to come up with the additional funds.
When and how does the exit Strategy work?
The common exit strategy is when the property is sold after a certain period of time, which the Tenants In Common have or will agree upon based on Market conditions, Appreciation, Offers received or a buyer already in place as in a Lease with Option to Purchase.
Also if a co-owner wants to get out early, co-owners are on Fee Title, allowing them to sell their interests to other buyers any time on their own without having to have the permission of any or all the other co-owners. A co-owner who decides to sell must first notify and offer it to the other co-owners. Other co-owners have first right of offer, after which co-owners are free to sell to another party, subject to the lender's approval if there is a loan. The Tenant In Common Agreement provides the proper procedures for this and all other issues.
How am I protected if one of the co-owners gets in any kind of trouble?
Only the pro rata share of the property of the co-owner in trouble could be limitedly affected. The property and its workings as stipulated in the Tenants In Common Agreement would continue just as planned, while the co-owners pro rata share’s of the lease distribution or ownership would be redirected according to the law.
Who should I contact if I have a question that is not covered here?
You can either send an email to tic@hihcorp.com or call our office at 916.922.2085 and ask to speak to anyone of our many associates that handle your specific area of inquiry.
What is my next step if I am ready to acquire fractionalized co-ownership?
Start the discussion with one of our associates by calling our office at 916.922.2085 and they will assist you in finding the best possible Tenant In Common (TIC) fractionalized co-ownership in our portfolio based on your needs and requirements. (Please see FAQ – PROPERTY ACQUISITION CRITERIA) Disclaimer: Information on this site is only for informational purposes only.
