1031 TIC
Normally an exchanger has a whole piece of investment property to sell. He sells and closes that property, the money goes to the exchange company, the investor identifies a new piece of property within 45 days, and closes on that property within a 180 days. As long as you’re adept at evaluating investment properties, and you can accept the risk on a single piece of property, this system works well.
But what if you’re the type of guy that would rather buy a mutual fund than a stock? Let somebody else do the math, the management, and base your investment on the strength of their pro forma and analysis. If this is the case, then a 1031 TIC may be for you. In this scenario, you’re not buying a whole piece of property. You evaluate a pro forma submitted by a “sponsor” who is looking to raise a target amount of capital secured by an undivisible interest in a particular property. There is normally a minimum investment amount you can 1031 into the property, and a maximum amount of capital that is looking to be invested. Multiple owners come in through multiple closings. The performance of your investment is usually controlled by a put-call agreement and by aggregating together with the other investors are able to buy a more valuable piece of property than you would normally be able to purchase that, theoretically, may have a higher return on investment than a property of less value. At some point in the future, the property is sold, or your interest is purchased, and the tenants in common 1031 into their next investment.
There are a number of people in Central Oregon putting these kind of investments together. If you would like their names and numbers please contact me. For more information check out http://en.wikipedia.org/wiki/Tenants_in_common_1031_exchange