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Real estate investment opportunities abound |
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| These properties provide investors
with passive cash flow, without the headaches associated with active property
management. For a base investment of $100,000, TIC owners enjoy not only the full
advantages of real estate ownership (including tax-sheltering and appreciation),
but access to otherwise unaffordable properties such as office buildings, shopping
centers, apartment complexes, assisted living facilities, golf courses, hotels
or even industrial properties in various geographic regions.
Geographic diversity is important, notes Milana,
because while some real estate markets will offer investors a great deal of value,
growth and income generation this year -- notably North Carolina, South Carolina,
Alabama, Texas, Tennessee and Montana -- others will remain flat or continue correcting
for perhaps the next three years. " And you have to look beyond your own
neighborhood for performance, because not every region will be done correcting
in 2007." Although TICs can be a viable alternative to
owning a real estate property on your own, prospective investors need to be careful.
They can be terrific long-term investments for those with an adequate reserve
of capital and an understanding of the risks involved, but they're inappropriate
for short-term, risk-averse or cash-poor investors. Unlike
stocks, TICs by nature are illiquid. You can't decide today that you want out
and get your money tomorrow. And currently no secondary market for the sale of
TIC interests exists. Also, should the real estate market go soft (as is the case
in many parts of the country), the income these properties generate could be greatly
reduced due to a loss of tenants. Financing issues and management
problems, too, can negatively impact a TIC investment during difficult economic
times, and since all co-owners have a voice in decision-making, reaching a consensus
in the midst of adversity could prove both challenging and costly. Finally,
as is true of every complicated investment "one must do a lot of homework,
since they can be promoted by some really questionable hustlers," cautions
Sheehan. That said, the benefits of real estate ownership are
plentiful, whether you are in the market for hands-on or hands-off investments,
and whether you're looking for income or capital appreciation potential. But it's
always important to examine and fully understand what you're getting into before
signing any documents or writing any checks. |
