Discover How TIC Fractional Ownership Can Make Homebuying More Accessible

Are you dreaming of owning a home but feeling overwhelmed by the rising costs? You’re not alone. Many people face this challenge, especially in today’s market, where home prices can seem out of reach. However, there's a solution that is gaining attention and making homeownership more accessible: TIC fractional ownership.

TIC, or Tenancy in Common, is a unique way of owning property that allows multiple parties to share ownership. This model is especially beneficial for those who want to step into the housing market without breaking the bank. Let’s explore how TIC fractional ownership can make homebuying more accessible and help you achieve your dream of homeownership.

First, let’s break down what TIC fractional ownership is. In a traditional property purchase, one individual or family owns the entire property. However, in a TIC arrangement, two or more individuals own a share of the property. Each owner has the right to occupy the property and can use it as their primary residence, vacation home or rental. The ownership shares can be divided in any way that the co-owners agree upon, or as outlined in the TICA, allowing for flexibility in terms of investment and usage.

One of the most significant advantages of TIC fractional ownership is the reduced financial burden. Instead of shouldering the entire cost of a property, you only pay for your share. For example, instead of having to purchase all 4-units of a 4-plex, you can purchase one and own 25% of the entire property. This means that you can afford a larger or more desirable property than you could on your own. More importantly, most TIC's we are seeing are either new construction or completely renovated inside and out, allowing for one to buy a refurbished or new home for slightly below market on a single family or Condo as a way of gaining entry into the housing market. Due to limited financing options and higher rates, TIC's usually sell on average for 10-15% below market for a similar condo or SFR. As a TIC Financing Specialist, we have additional financing options that other Lenders and TIC Developers have not discovered, allowing more TIC's to be sold in a fractional ownership community, and is some cased for less down, with fewer lending restrictions and better pricing.  By splitting the purchase price and ongoing expenses such as property taxes, maintenance, and insurance, you can make homeownership more feasible.

Another benefit of TIC fractional ownership is the potential for creating a sense of community. When you co-own a property with others, you have the opportunity to build relationships and share experiences. This can be particularly appealing in urban areas where homeownership can feel isolated. You might find that sharing a space with like-minded individuals enriches your life and enhances your overall living experience.

While TIC fractional ownership has many advantages, it’s important to consider the responsibilities that come with it. Communication is key in a TIC arrangement, as all co-owners must agree on decisions regarding the common areas of the property. This includes maintenance schedules and how to handle financial matters. Setting up a solid agreement upfront can help prevent misunderstandings and ensure that everyone is on the same page. Sirkin Law drafts the majority of TIC Agreements (TICA) in Los Angeles county. Most TIC's require an HOA Management company to facilitate those financial responsibilities. The HOA payment often includes insurance for the entire property, water, trash, sewer and landscape maintenance, but can vary from one TICA to another. 

It’s also vital to understand the legal aspects of TIC ownership. Since each co-owner has a legal interest in the property, it’s crucial to draft a comprehensive TIC agreement. This document should outline the ownership shares, usage rights, and responsibilities of each party. Consulting with a real estate attorney experienced in TIC transactions can help you navigate these complexities and protect your interests.

Many people wonder how TIC fractional ownership affects their ability to build equity and gain value from their investment. The good news is that as the property appreciates over time, so does your share. You still have the opportunity to sell your portion in the future or buy out your co-owners if you decide to take full ownership. This means that TIC ownership can be a stepping-stone to full homeownership or a way to enjoy a more luxurious living arrangement while still building wealth.

If you are considering TIC fractional ownership, it’s essential to assess your financial situation and long-term goals. Contact Kevin Hall for a free mortgage consultation and loan pre-approval. Start by determining how much you can afford to invest and what type of property you’re interested in. Having a clear vision will help you find the right co-owners who share similar financial capabilities and lifestyle preferences.

Engaging with a knowledgeable mortgage loan officer can provide you with the guidance you need to navigate this process confidently. Someone like Kevin Hall can help you understand your financing options, explain the implications of TIC ownership, and connect you with other professionals, such as real estate agents and attorneys, who have experience in TIC transactions.

Most TIC Sellers are Investor or Developers, but that does not mean you cannot find some friends to help you purchase your own TIC together. Or, you could purchase a multi-unit home, occupy one unit, and sell the other units to reduce your own acquisition cost in the long run. Once you have a plan, it’s time to begin the search for the right property. Kevin Hall is also a licensed Real Estate Agent and can help with your home search! Look for homes that fit your shared vision, budget, and location preferences. Make sure to discuss each party’s priorities, whether that’s the number of bedrooms, outdoor space, or proximity to schools or work.

As you consider your options, keep in mind the importance of finding a property that aligns with everyone’s needs. It’s helpful to create a wish list of features you all desire and prioritize these as a group. This collaborative approach not only strengthens your partnership but also ensures that everyone is satisfied with the final decision.

In addition to the financial benefits and community aspects, TIC fractional ownership can also offer a unique opportunity to experiment with different living arrangements. For those who may not be ready to commit to a traditional home for the long term, TIC can serve as a trial run. It allows you to experience co-ownership before diving into a full purchase on your own.

Many people find that living in a TIC arrangement enhances their appreciation for homeownership while allowing them to test the waters. If you discover that living with others suits you, you can transition into a full ownership situation or even continue the TIC arrangement long-term, depending on your evolving needs.

As you embark on this exciting journey toward homeownership through TIC fractional ownership, remember that you don’t have to navigate it alone. Reach out to our team of experienced and knowledgeable mortgage loan officers, like Kevin Hall who specializes in TIC Financing, and can help you navigate this innovative approach to buying a home. We’re here to assist you in achieving your goals and making your dream of homeownership a reality. Don’t hesitate to contact us today to discuss your specific needs and how we can help you take the next step toward owning your home.