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					THE TENANT-IN-COMMON (TIC)
REAL ESTATE INVESTMENT STRUCTURE

                         Ron Ringlien
                   NEW CYCLE FINANCIAL
                   PEAK SECURITIES CORPORATION
                            562-430-3796
                    RCRINGLIEN@ATTGLOBAL.NET
                          SEAL BEACH, CA




   THESE COPYRIGHTED MATERIALS ARE THE PROPERTY OF RON RINGLIEN AND
   PEAK SECURITIES CORPORATION, MEMBER, NASD/SIPC. NO REPRODUCTIONS
  ARE PERMISSABLE WITHOUT THE EXPRESS WRITTEN CONSENT OF THE AUTHOR.
                  DISCLOSURE
  THIS PRESENTATION IS FOR REAL ESTATE BROKERS/AGENTS TO PROVIDE
  INFORMATION ABOUT THE TENANT-IN-COMMON (TIC) REAL ESTATE
  INVESTMENT STRUCTURE. THE INFORMATION PRESENTED HEREIN IS FOR
  ADVISORY USE ONLY, IS PURELY EDUCATIONAL, AND NOT TO BE TAKEN AS
  EITHER TAX OR INVESTMENT ADVICE.


THIS PRESENTATION HAS BEEN CREATED BY
PEAK SECURITIES CORPORATION, MEMBER, NASD/SIPC.
ALTHOUGH THE FACTS CONTAINED IN THIS
PRESENTATION HAVE BEEN VERIFIED, THERE ARE
ALSO GENERAL OPINIONS THAT HAVE ASSERTED
THAT ARE THOSE OF PEAK SECURITIES CORPORATION.
NO INFORMATION CONTAINED IN THIS PRESENTATION
SHOULD BE RELIED UPON BY ANYONE WITHOUT DISCUSSING
THE SPECIFIC CIRCUMSTANCES WITH A TAX OR INVESTMENT ADVISOR
      WHO IS THIS FOR?
• BROKERS/AGENTS
 – ADVENTUROUS
 – ENTREPRENURIAL BENT
 – EMBRACES NEW CHALLENGES
 – WANTS TO GROW BUSINESS
 – SELF RELIANT
 – INNOVATIVE
 – EXISTING NETWORK(S) & NETWORK BUILDERS
 – EXPERIENCED AND NEWER WITH ABOVE
   CHARACTERISTICS
 – SFR “STEP OUT”
ARE YOU OVERLOOKING SOME
       “DIAMONDS?”
        THE GOAL
“ACTION!”   (“FLIP THE SWITCH”)
            WHAT IS A TIC?
• THE “NEW” PROPERTY IN A 1031 EXCHANGE


• A PREPACKAGED, PASSIVE OWNERSHIP STRUCTURE THAT
  ALLOWS UP TO 35 PERSONS SIMULTANEOUSLY TO
  DIRECTLY OWN DIFFERENT-SIZED FRACTIONAL INTERESTS
  IN THE SAME PIECE OF REAL ESTATE


• NOT A PARTNERSHIP OR NT-REIT


• TENANT-IN-COMMON IS ONE OF
  OLDEST FORMS OF OWNERSHIP
  INTEREST
   THE IMPETUS BEHIND TIC
• THE “AGE WAVE” EARLY BABY-BOOMERS ARE 61

• WANT TIME TO ENJOY WEALTH-FEWER OWNERSHIP &
  MANAGEMENT PROBLEMS

• “APPROXIMATELY HALF OF ALL 1031 EXCHANGES
  COMPLETED BY INDIVIDUALS WITHIN THE NEXT 10 YEARS
  WILL BE TICs”
                        Gary Leavitt
    TIC KNOWLEDGE BENEFITS TO
          BROKERS/AGENTS
•   DEVELOP A RARE, HIGHLY-VALUED EXPERTISE IN A RAPIDLY GROWING BUSINESS

     –   INCREASE YOUR LEVEL OF PROFESSIONALISM (BECOME A “TRUSTED ADVISOR”)
     –   SET YOUSELF APART

•   PROVIDE CLIENTS WITH INNOVATIVE SOLUTIONS TO VEXING TAX AND MANGEMENT
    ISSUES

•   GAIN EXTRA, LARGE LISTINGS

•   GAIN MORE REFFERALS

•   ANOTHER QUALITY CLIENT CONTACT

•   SHARE IN TIC PLACEMENT FEES?

•   NEED A “GUIDE/PARTNER?”

•   HOW DO I DO THIS?
         1031 BENEFITS
• “PAY TAXES LATER”


• INTEREST FREE IRS/FTB LOAN


• LEVERAGE UP


• DIVERSIFY
        THE 1031/TIC COMBO
ENTER:

THE 1031 EXCHANGE

EXIT:

THE TIC

THE “PROCESS:”

SELL FIRST
 HOW DOES THIS WORK?


               QUAL INTERMED         TIC
OLD PROPERTY
                               (NEW PROPERTY)
CAPITAL GAIN TAX PROJECTION
FEDERAL CAPITAL GAIN TAX   (15%)

CA STATE TAX               (9%)

DEPRECIATION RECAPTURE     (25%)
       DEPRECIATION RECAPTURE TAX
                EXAMPLE
CASE: Transfer of property with $500,000 of post-1986 depreciation
  deductions. Pre-1987 (“excess depreciation”) depreciation
  recaptured at ordinary income marginal rates.
TRANSFER                 $1,000,000 (FMV)
ADJUSTED BASIS           $100.000
TOTAL GAIN               $900,000

$500,000 OF RECAP @ 25% = $125,000
$400,000 OF LTCG @ 24% = $96,000 *
  TOTAL TAX OBLIGATION =$221.000
*FED&15%: CA @ 9%= 24%
 QUALIFYING “OLD” PROPERTY
• USED IN TRADE OR BUSINESS
• HELD FOR INVESTMENT (ONE YEAR PLUS ONE DAY)
   –   RAW LAND
   –   INCOME PROPERTY
   –   TIMBER RIGHTS
   –   WATER RIGHTS
   –   OIL/GAS W/I & ORRI
   –   GRAVEL/QUARRY RIGHTS
   –   30 YEAR LEASEHOLD INTERESTS
   –   VACATION HOMES
   –   TIME SHARE
        TIC IRS QUALIFICATION
           REQUIREMENTS
•   NO MORE THAN 35 CO-OWNERS
•   NOT A PARTNERSHIP
•   INVESTOR RIGHT TO SELL,ENCUMBER
•   CAN VETO USE, SALE, FINANCING, LEASING
•   NO DISPROPORTIONATE ALLOCATIONS
•   15 SEPARATE ITEMS


“INVESTOR FRIENDLY”
AND TRANSPARENT
             TIC TAX SITUATION
•   NOT AN ENTITY BUT A DIRECT INTEREST



•   THE TIC MAY NOT FILE A TAX RETURN



•   NO DISPROPORTIONATE ALLOCATIONS
    (SIMILAR TO PARTNERSHIPS WITH
     TAX-EXEMPT ENTITIES)



•   NO “INSIDE” AND “OUTSIDE” BASIS AS AVAILABLE IN
    PARTNERSHIPS
              TIC GROWTH
• $4 BILLION IN EQUITY IN 2006 FROM START IN 2002

• BABY BOOMER FUELED

• EDUCATION

• NEED FOR RETIREMENT INCOME

• WEALTH PRESERVATION

• 50% OF 1031 W/I 10 YEARS
               TIC BENEFITS
•   PRE-PACKAGED (A “TURN KEY” SOLUTION)
•   35 VARYING SIZED “SLICES”
•   MANAGEMENT-FREE
•   INSTITUTIONAL-GRADE PROPERTY
•   MONTHLY CHECK
•   DIVERSIFICATION
•   NON-RECOURSE DEBT
•   LOWER INTEREST RATE
•   TAX DEFERRMENT
•   MAINTAIN REAL ESTATE CAPITAL
•   NEW DEPRECIATION SCHEDULE
•   HIGHER GROWTH AREAS
         FUTURE DEMAND
• INSTITUTIONAL QUALITY

• NOT TIED TO SFR

• NOT OVERBUILT

• “MAINSTREAM” ASSET IN AA
            TIC LIMITATIONS
• NO MORE THAN 35 “ACCREDITED” CO-OWNERS

• LIQUIDITY
  – INVESTOR LEVEL
  – PROPERTY LEVEL (“EXIT STRATEGY”)

• RE-FINANCING RISK

• MARKET RISK

• MANAGEMENT RISK

• UNKNOWN CO-OWNERS
            TIC SPONSORS
            (WHO ARE THESE FOLKS?)

•   THE GENESIS
•   THE TIC UNIVERSE; 80 SPONSORS
•   SIZE/EXPERIENCE
•   PROPERTY TYPE
•   LOCATION
•   MINIMUMS
•   MINI CLOSINGS
•   PRO-FORMA LEASES
•   MASTER LEASES
      SELECTING SPONSORS
•   PERSONAL KNOWLEDGE
•   REPUTATION
•   PERFORMANCE
•   SPECIALIZATION
•   EQUITY MINIMUMS
•   LOCATION
•   SIZE
•   NUMBER
•   PRODUCT AVAILABILITY
•   INVESTOR COMPETITION
COMPENSATION TO SERVICE
      PROVIDERS
COMPARISON WITH OTHER GROUP STRUCTURES:

NO “PROFIT SHARING”

SPONSOR
REAL ESTATE COMMISSIONS
MANAGEMENT FEE
DEBT ARRANGEMENT FEE

SECURITIES DISTRIBUTION
ALLOWANCE TO BROKER/DEALERS


REAL ESTATE BASED
REAL ESTATE COMMISSIONS
DISTRIBUTION RE REFERRAL FEE


LENDER
   TIC DEAL DISCLOSURE
• SECURITIES BASED
 – THE PPM
 – SEC REGULATION D


• REAL ESTATE BASED
 – THE OFFERING CIRCULAR
 – NO REGULATION
    TIC DEAL STRUCTURES
• BY MINIMUM EQUITY REQUIREMENTS
• DEBT
• BY PROPERTY TYPE
      OFFICE
      RETAIL
      INDUSTRIAL
      APARTMENTS
      SELF-STORAGE
      NNN DEALS
      GOLF COURSES
• MASTER LEASES VS PRO FORMA
• THE “CUSTOM TIC”
• DIRECT INVESTOR (LLC)
      DIRECT INVESTOR (LLC)
             THE “MINI-TIC”
•   LLC IS THE TIC INVESTOR
•   DIRECT INVESTOR IS MEMBER OF LLC
•   $25,000 MINIMUMS
•   CAN’T SELL
•   EQUITY ONLY
•   CAN’T 1031 IN
•   CAN’T 1031 OUT
•   NOT ON DEED
SECURITIES OR REAL ESTATE?
                 (SEC VS. NAR)
SECURITIES (95%)
 –   DUE DILIGENCE
 –   FULL DISCLOSURE (SEC/NASD)
 –   SECURITIES LICENSED
 –   THROUGH BROKER/DEALERS
 –   LARGER DEALS
 –   REG “D”


 REAL ESTATE (5%)
 – THROUGH REBs
 – REFERRAL FEE
THE TIC’S NON-IDENTICAL TWIN
WHAT’S A “DST?” A DELAWARE STATUTORY TRUST
• NOT A TIC
• REV.RULE 2004-86 FOR 1031 QUALIFICATION/FRACTIONAL
  INTERESTS
• POPULARITY
• AN IRS “DISREGARDED ENTITY”
• USUALLY MASTER LEASED PROPERTY

TIC SIMILARITIES
• 1031 QUALIFIED
• GROUP OWNERSHIP
• PASSIVE
• PREPACKAGED
• SECURITIZED
 THE DST “GOOD” DIFFERENCE
• LEND TO ONE ENTITY (NO “SPE LLCs”) LENDERS
  LOVE IT!

• BANKRUPTCY-REMOTE

• LIABILITY PROTECTION

• NO 35 INVESTOR LIMIT

• LOWER FEES
THE DST “BAD” DIFFERENCE
•   NO VETO RIGHTS
•   NO RIGHT TO SELL
•   NOT ON DEED
•   7 “DEADLY SINS”
    –   CAN’T CHANGE LEASES
    –   NO NEW LEASES
    –   NO CAPITAL EXPENDITURES
    –   NO REFINANCING
    –   NO FUTURE CONTRIBUTIONS
    THE “SPRINGING LLC”
    THE ANTIDOTE: MASTER LEASE
                 TIC PROSPECT
                CHARACTERISTICS
•   TIRED OF HANDS-ON MANAGEMENT

•   USED UP DEPRECIATION

•   QUITTING BUSINESS

•   DON’T WANT REAL ESTATE CAPITAL REDUCED BY TAXES

•   WANT GEOGRAPHIC/PROPERTY TYPE DIVERSIFICATION

•   LOW BASIS/HIGHLY APPRECIATED EXISTING PROPERTY

•   LOW CASH FLOW/VALUE

•   VALUE INSTITUTIONAL-GRADE NEW PROPERTY

•   OK WITH FRACTIONAL INTEREST/LESS CONTROL

•   DOES NOT NEED LIQUIDITY
            TIC ISSUES

• VETO RIGHTS

• THE CALL AGREEMENT

• SPE LLC
  – FIREWALL
               1031/TIC ISSUES
             “FORM OVER SUBSTANCE”
•   “EQUAL OR UP” (CASH AND DEBT)
•   “LIKE KIND” PROPERTY
•   PROPERTY HELD FOR RESALE
•   QUALIFIED INTERMEDIARIES
•   TIME LINES (45/180)
•   SAME TITLE OWNERSHIP
•   DESIGNATED PROPERTIES
•   HOW OFTEN?
•   REFINANCING OF OLD PROPERTY
•   SELLER FINANCING
•   EXCHANGE ADDENDUM
•   REVERSE EXCHANGES
•   “MOVING PARTS”
    THE QUALIFIED INTERMEDIARY
               (ACCOMMODATOR)

•   CRITICAL PLAYERS
•   NOT REGULATED
•   CAN’T USE YOUR ATTY/CPA/ADVISOR
•   2000 IN U.S.; ONLY 39 PROPERLY BONDED
•   FEDERATION OF EXCHANGE ACCOMMODATORS
•   USE ENTITY , NOT INDIVIDUAL
•   SOUTHWEST EXCHANGE EXAMPLE
    ($96 MILLION MISSING)
                   CLIENT PREP
         “WHAT WILL MY CLIENT HAVE TO DO TO
                    SUBSCRIBE?”
• “PAPERWORK”
• THE SECURITIES BROKER/DEALER APPLICATION WITH
  ARBITRATION AGREEMENT
• THE PURCHASER QUESTIONNAIRE
   –   FINANCIAL INFO
   –   TAX RETURNS
   –   ACCREDITED INVESTOR
   –   ACCEPTANCE BY BOTH SPONSOR & LENDER
   –   ATTESTATIONS
        • BANKRUPTCY
        • LITIGATION/JUDGEMENTS
         OTHER ISSUES AND
           DOCUMENTS
• TIC AGREEMENT
• CALL AGREEMENT
• PURCHASE AGREEMENT
• PROPERTY MANAGEMENT/ASSET
  MANAGEMENT AGREEMENT
• LOAN DOCUMENTS
    – SPE LLC
 TIC INVESTMENT PROCESS
• “CASH AT Q.I.”TO HEAD OF LINE

• FIRST SELL OLD PROPERTY

• 45 DAY I.D. RULE

• 3 PROPERTY I.D. RULE

• 200% I.D. RULE
                 WRAP UP
• AVAILABLE TO HELP/PRESENT TO YOUR RE COMPANY




• “TIC TRACKS”




• “THE CASE FOR THE EXPERIENCED
  REAL ESTATE BROKER/AGENT AND
  THE TIC”
        THE GOAL
“ACTION!”   (“FLIP THE SWITCH”)
CONGRATULATIONS!!!

				
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posted:12/20/2012
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