Post about "Real Estate"

Can TIC’s Survive in the Existing Real Estate Market?

TIC InvestorsIn this very dynamic real estate market TIC (Tenant in Common) investors have suffered as the market has weakened. In particular, those real estate investors that joined TIC investments in the last four years, (at the top of the market) are finding that in some locations, high vacancy rates and plunging rental rates are squeezing their cash flow and their ability to pay their mortgages.Who bought TIC investments?As baby boomers have aged, they wanted to reposition their assets into investments that did not take up as much of their time and that did not involve their day to day attention. These investors wanted to escape management intense investments and buy into real estate investments that guaranteed them a “safe and consistent” return.They had typically sold other investments and traded into the TIC using a 1031 exchange, pooling with other investors which seemed like a safe bet. Unfortunately, many (not all*) TIC investments were organized by syndicators who purchased the properties at one price and then marked up the properties to resell to their investors. In many cases they used short term “interest only” loans to get their deals to pencil, betting that real estate appreciation as well as increasing rents would increase the value of the properties quickly and allow the properties to be refinanced.As a result of the large number of investors (TIC syndicators, REITS and others) competing for the same inventory, the price of assets went sky high thus lowering the yields of the investments. CAP rates as low as five and a half were not unusual and CMBS loan originators and other financial institutions were willing to lend to TIC syndicators and their investors on a non recourse basis.The Real Estate Market was not as strong as investors expected.Market appreciation, and rent increases did not occur. In the majority of American markets most property vacancy rates have increased, making it difficult for TIC’s to have enough money to cover their expenses. In many cases the properties performed to proforma, but when the time came to refinance them the rules had changed and the lenders wanted to see more equity in each investment. Nervous lenders have moved their investor equity requirements from 25% to 40% and even 50%.This has forced many TIC investors into the unpalatable position of significantly increasing their cash investments in properties to save their existing equity positions and furiously attempt to get new financing for their deals to replace the existing “interest only loans”. These new equity requirements are stretching the resources of TIC investors.TodayIn the past two years DBSI and Sunwest Management two major TIC syndicators have dissolved and filed for bankruptcy. As these cases move through the courts, questions have emerged about the future of TIC property sales. It seems likely that real estate TICs sold by real estate brokers will disappear and most likely be replaced by securitized TIC’s for larger investments and real estate partnerships for smaller investments. (TICs can be sold as real estate investments or as securities, but Real estate TICs are not held to the same high standard of disclosure as securities investments).A reflection of this trend, is that the Tenant-In-Common Association (TICA) changed their name to Real Estate Investment Securities Association ( REISA). In the last year REISA recommended that all TICs be structured as securities.** Some TIC syndicators are still in business such as RealtyNet Advisors. Realtynet Advisors have adjusted to changes in the market place with their special approach to TIC’s where there is no debt just equity invested, in other words they do not borrow money to make a deal. They find enough investors to contribute equity for the full sales price.The future of TIC investments will be dictated by the recovery of the market; in the mean time look for other ways to make money investing in real estate. Some of these other options include purchasing foreclosed property, purchasing real estate deals with large (50%) down payments or buying notes from banks that are desperate to increase their cash positions.Notes:**RealtyNet Advisors, are not your average Tenant-In-Common sponsor. Unlike most TIC sponsors, Realty Net Advisors don’t burden their properties with debt, brokerage fees, or other costly charges, and they do not sell at a higher than market rate. With the RealtyNet’s simple, co-ownership structure, investors own an undivided, fractional interest in an entire property. They each share in their portion of the net income, tax shelters, and property appreciation.” (quoted from RealtyNetAdvisors website) See What is a Tenant in Common (also known as Undivided Fractional Interest) Investment?The tenant in common (or undivided fractional interest) structure allows investors to purchase an interest in a significant real estate asset, perhaps larger than they could obtain individually. The investor acquires a percentage ownership (title and deed) and receives passive rental income while receiving the tax benefits of traditional real estate. The investors own and control the properties, not a third party. TIC ownership provides investors with the first ever means for ownership diversity, both in location and type, of their real estate portfolio.Unlike partnership real estate, TIC ownership entitles each owner to the same ownership rights regardless of the equity invested. This element of the investment structure puts no individual owner (or group of owners) in direct control of the property over any other investor(s). You can truly have all of the ownership benefits and security of a large commercial asset with significantly fewer obstacles. As with any type of investment, the value of a fractional interest typically increases annually due to escalations inherent in most tenant leases. From Real Estate Investment Securities Association website at,** REISA is a national trade association for professionals who offer and distribute securitized real estate investments

Paradiso Villas Community Homes For Sale and Real Estate in Cedar Park, Texas

Paradiso Villas HomesParadiso Villas real estate is designed to provide luxurious comfort for all residents while making sure not to make maintenance something home owners have to worry about. Paradiso Villas homes for sale start at an average price of $160,000. The location of Paradiso Villas homes makes it easy for residents to leave the community quickly and return without much travel time. Cedar Park homes for sale in Paradiso Villas are nestled right on West Parmer Lane and place home owners within close proximity to the City of Cedar Park as well as downtown Austin. Paradiso Villas homes are a community illustrating the beauty of Tuscany. These Tuscan styled homes also place residents within easy access to quite a few areas for shopping as well as dining options, a number of employers, and well known hospitals. The Tuscan style of the homes in this area requires no maintenance and there are plenty of green spaces and parks not far from your backyard. The architecture of Paradiso Villas homes for sale and the beautiful landscaping that can be seen surrounding it is maintained regularly by professionals, which ensures residents of this peaceful community have plenty of time to sit back, relax, and enjoy the beautiful neighborhood and entertain friends and family.Homes For SaleThe average starting price for these homes for sale is around $184,000 and can get as high as $225,000 depending on a home buyers preferred size. The average starting size for this real estate is around 1,300 square feet and can get as large as 2,000 square feet. This community has a wonderful home owners association that takes care of landscaping for common areas, insurance, maintenance and trash collection. The monthly dues for these homes are $160.This real estate can date its origins back to 2007 with more homes being built now. If you cannot find a home already standing that meets your family’s needs, you can build your own and customize it how you like! This community is filled with condos that were constructed so that they would look like single family homes.Real Estate In This CommunityCedar Park homes for sale are zoned to be serviced by the well-known and outstanding Leander Independent School District schools. Among others, your children will have the opportunity to enroll in Ronald Reagan Elementary School, Knowles Elementary School, Artie L Henry Middle School, Brushy Running Middle School, Vista Ridge High School, Cedar Park High School, and Leander High School. A great number of schools within the Leander Independent School District have been recognized for their outstanding academic performance and many of the high schools in the district have been recognized for their college readiness programs. The children in your home will be in more than capable hands in this district.