You may or may not have heard of TICs. Not it is not a nervous reaction or an annoying bug, but it is the acronym for Tenancy In Common.
What the heck is that? You may or may not have heard of TICs. They tend to be more common in the San Francisco market area, but they are starting to be seen more often in the East Bay as well.
To boil down in simple terms, TICs are a way to have a fractional ownership in a property. Let’s say you and 3 friends want to buy a 4 plex together. TICs is way for you all to purchase together and have an agreement that outlines the ownership of the property. The unit you possess is your “fraction” of the TIC.
TICs do require a legal agreement, very HOA like, that identifies the percentage of the fractional ownership, what is common area space, how to pay and deal with common area maintenance, what dues are to be paid to maintain the area, etc.
What are the advantages? In a landscape that can be a lot more challenging to complete a condo conversation, TICs do provide a way to have a condo-like environment without the condo conversion.
TIC lending a few years back was often the biggest hurdle to get over. There were few and far between lenders who would actually lend on these types of properties and they were often more expensive than traditional lending for a condo or single family.
The lending landscape has changed. And while often the big box lenders will not do TIC lending, there are many more lenders who now provide TICs lending, and typically at rates that are on par with the current rates.
TICs can provide a great way to be able to purchase a property in areas where the cost of housing tends to be high. They are definitely worth a look!
Have more questions? Reach out to us and we would love to chat more about it!