For more information, please contact: 795 Folsom Street, 1st Floor San Francisco CA 94107 415.830.5620 www.buckinghamcommercial.com Broker | California DRE #01254902 Buckingham Commercial Real Estate Self-Directed Tenant in Common Commercial Real Estate Investment Lose the "Loads" and keep the cashflow IMPORTANT NOTICE: This information is provided for general educational purposes only. It is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice about your situation. Copyright © 2007-2008 by Jason S. Buckingham Buckingham Commercial Real Estate 795 Folsom Street, 1st Floor San Francisco CA 94107 415.830.5620 www.buckinghamcommercial.com THE VEHICLE: TENANT IN COMMON ("TIC") INVESTMENTS TIC interests allow investors to acquire, together with other investors, a percentage or fractional interest of a larger property that is potentially more stable, secure and profitable than what they could have acquired otherwise. For many residential investors, this is an easy way to start in commercial real estate. This method of investing also allows investors to diversify their property holdings, both by asset class (office, retail, multifamily) and geography. Properly structured TIC transactions (those that adhere to IRS Revenue Procedure 2002-22) should qualify for like kind treatment under Section 1031 of the Internal Revenue Code. Like kind treatment allows investors to defer capital gains (15% federal), depreciation recapture (25% federal), and possible state taxes on gain by performing a 1031 exchange. Keeping the gains allows investors to grow wealth much more effectively than paying the tax. THE SOLUTION: SELF-DIRECTED TIC INVESTMENT What if investors could have the advantages of a TIC structure without the added expense of a syndicator? Investors can, with the help of qualified advisors, act as their own sponsors and take advantage of the added buying power and tax advantages that TICs provide. When a TIC agreement is written from the investor's point of view, the investors also benefit by avoiding the expenses and control problems that are built into many syndicated TIC projects. HOW WE CAN HELP YOU ACHIEVE MORE WITH YOUR REAL ESTATE Buckingham Commercial Real Estate, along with the Law Offices of Jason S. Buckingham, Inc., provides investors a complete arsenal of transactional expertise and experience. Together, we can: THE PROBLEM: SYNDICATOR LOADS AND CONTROL provide buyer broker representation to identify suitable properties according to the There are many "syndicated" TIC offerings available in the marketplace. These arrangements usually involve a sponsor company prepackaging a property and reselling fractional interests in the property for a markup (usually referred to as a "load") to small investors. The problem is that that the load over the lifetime of the project ranges from 10% to as much as 25% of the cash flow generated from rents. We'll be there for you after the deal closes, because the Law Offices of Jason S. Buckingham, Inc. The usual up-front load for a buyer is at least 6% - that's as much as an entire residential real estate commission. And this charge is in addition to the regular costs of sale that come with a commercial real estate purchase (title and escrow, legal fees, survey, environmental, loan fees, etc.). To make matters worse, some sponsors structure their co-ownership agreements and loan documents so that investors retain very little meaningful control over the project. This can be a big shock to investors who believe that they should have control over decisions affecting their investment property. Jason S. Buckingham has worked in some aspect of real estate transactions since 1993, with the past several years focused on commercial real estate transactions. Jason has worked with some of the largest real estate developers, owners, and lenders in the country. With experience in property analysis, acquisitions, financing, leasing, and ongoing management issues, Jason offers his clients the kind of expertise and insight that only comes from having done it before. also provides general counsel services for each individual LLC at a very affordable flat rate. That way, dealing with property managers, eviction lawyers, and coordinating regular owner meetings is a breeze. provide buyer's counsel services to negotiate contracts and review due diligence documents structure the TIC documents for the investors and organize LLCs for individual investors investor's criteria ABOUT JASON S. BUCKINGHAM