Question about TIC "reserve fund"
I want to exchange into an investment which is management free on my part. I'm very interested in TIC's. The sponsor with who I'm discussing possible investments has said that I will have to contribute to a reserve fund which will be used for repairs and improvements. Will I be asked for more beyond my initial contribution? Is there a risk that a reserve fund is a financial black hole?
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You have both mentioned TIC deals. Jeff, TICs have sponsor fees too. If not, why would they be doing them? I still think the biggest issue with TICs is Unanimous Consent. In Unanimous Consent, one of the four investors you are looking at doing a deal with could potentially block anything you want to do. Also, another downfall to Unanimous Consent is inheritance. You might have a great partner who passes away and leaves his interest to a nephew or grandson who is into Occupy Wall Street or something similar. That person could block a refinance, sale, re-leasing, or renovation. Could he extort the rest of the group or blow up the deal? Potentially.
Mark