How do you know if the tenant in common property that you would like to exchange into is a good investment?
First, start by looking at it as if you were buying the entire building, not just a fractional interest. If you are not a sophisticated real estate investor, employ the aid of a commercial realtor or financial advisor who can go over the propectus/ sales data with you. Look at the assumptions made and see if they will justify the proposed return over the long haul.
Make sure you deal with a TIC Sponsor company who has been in business for a while and has a successful track record. Make sure the management company is experienced, well funded and can produce a long record of profitable properties they have handled.
If you are not comfortable with a varying return, or don't want the possible risk of putting in more money should things not go well, look into getting a triple net lease, where the burden is transferred to the management company.
Call a local realtor in the area where the property is, and ask their opinion on the location and building condition. If you have the time and inclination, fly there yourself and see it in person.
Do your due dillegence just as you would if you were financing the entire purchase yourself. The right exchange will bring you years of steady income, good appreciation potential and hassle free real estate ownership. It's worth your time and effort to make the right choice.
Paula Straub
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