Tenancy-in-Common Investing is when income producing real estate is sold as securities - something like stocks and bonds. Investors own buildings directly rather than through a corporation or partnership. It's the age-old tenancy-in-common form of ownership, but with a twist. The investor turns his investment over to the investment management group, such as Triple Net Properties, LLC, and just collect the dividends.
PROS
Ease of Management:
Companies like Triple Net Properties of Santa Ana say they manage office and apartment buildings for investors who don't have to lift a finger.
Tax deferral:
According to a part of federal tax code known as 1031, investors who sell an apartment can defer capital gains taxes if they identify another similar rental property in 45 days and buy it within 180 days.
CONS
Less Liquidity:
These deals are for long-term investors. There is no secondary market for tenant-in-common securities, says the National Association of Securities Dealers. Also, unanimous consent of all investors in a property may be required to sell it.
Government Regulation:
So far government input has been helpful to investors. The Internal Revenue Service set down some rules for tenant-in-common investing in 2002, which helped fuel its expansion. But the NASD and the Securities and Exchange Commission are watching it closely. There is always a chance a government agency or Congress could change the rules.
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