A long-established section in the federal tax code, section 1031, allows real estate investors to sell property that has been held for investment purposes and defer capital gains and depreciation recapture taxes if they acquire “like-kind” exchange property of equal or greater value and reinvest all of their equity. Since the mid-1990s, many investors have experienced the benefit of reinvesting their equity into investment property interests structured as Tenancy-in-Common (TIC). TIC owners hold an undivided fractional ownership interest in investment property evidenced by a deed of trust.

TIC, also known as Co-ownership of Real Estate (CORE), enables an investor to participate in the ownership of institutional-grade, professionally managed investment properties. The investor’s equity can be diversified amongst several different properties, geographic markets and real estate companies, potentially increasing both the value and safety of the real estate investment. TIC/CORE investments are designed to offer preservation of capital, predictable cash flow and long-term appreciation in institutional-quality investment property assets that benefit from greater economies of scale.

With its features and benefits, TIC/CORE is an increasingly popular 1031 exchange option for many real estate investors. However, 1031 exchanges and TIC/CORE transactions are very complicated, with both tax and legal issues topping the list of potential pitfalls. It is therefore essential that investors be knowledgeable about what to look for in a quality advisor. Financial advisors are required by securities law to be properly licensed in order to consult clients regarding TIC/CORE transactions and other investment interests in real estate. Financial advisors should hold both Series 7 and Series 63 securities licenses to qualify them as knowledgeable, well-rounded consultants in the investment process. It is essential that they have experience in the commercial real estate business, in addition to an understanding of personal investment objectives and client suitability issues.

But perhaps the most important component to look for in a TIC financial advisor is their intimate, trusted and deeply rooted relationships with key real estate companies. This attribute is critical to their ability to provide the best opportunities for their clients. There are almost 80 real estate companies across the United

States that are either already involved or considering involvement in the TIC/CORE industry as a real estate provider. As with any industry, these 80 companies represent varying degrees of acumen, experience and quality. To achieve the greatest potential for a client, a financial advisor should have consistent access to the top ten percent of these companies in order to provide their client access to the best properties available. Obviously, a new financial advisor with little or no experience or industry knowledge may not have access to the top real estate providers, as these providers prefer to work with experienced consultants that specialize in this unique segment of the market.

Investors should also be aware of how their financial advisor stacks up, looking for a history of successfully completed transactions. A long and proven track record indicates that a financial advisor is an experienced professional. An investor wants such an advisor in their corner asking all the right questions, making appropriate and suitable recommendations, understanding the nuances of successfully completing TIC/CORE transactions and providing answers to any and all tax and legal questions.

When considering a 1031 exchange or TIC/CORE investment, investors should ask the following specific questions of the financial advisor:
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Becoming a successful real estate investor
Becoming a successful real estate investor requires being able to find good real estate investment deals and put them together. Your job is not to become an closing attorney, a management expert, or a repair person. Use professionals!

You must learn how to appraise and find the true value of real estate this information will help you make better investment decisions. Realtors, appraisers, and banks determine what a property is worth by looking at comparable sales usually three to five sales of similar property that has recently sold in the same neighborhood. You must be able to do the same.

Getting a list of comparable prices of properties bought or sold (and when it sold) for the neighborhood you need information about, and asking active real estate investors in your area what the market is like will be helpful and making a better investment decision. What is the ideal market for investing?
There is no such thing as an ideal real estate market for investing. It tends to be more difficult to find bargains in rising markets if the market keeps rising the probability of selling the property quickly for a large profit increases. In contrast but when property values are falling more bargains become available.
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