What Are the Pros and Cons of Buying a TIC Unit for a Primary Residence?

[Matt Wells]

I'm thinking of buying a tenancy in common unit as a primary residence. I may lease it out after a few years if it's allowed. I know TIC units are harder to get loans for, which makes them harder to sell and could impact the price. I've also heard it's tough to get a HELOC on them. If anyone has any experience living or investing in a TIC, please share the pros and cons and your experience. Any advice is appreciated.

[Andrew Cypert]

I believe TIC loans also have higher interest rates, which would greatly impact what people are willing to offer. A house in San Jose has been on the market for the last 6 months because they aren't able to get people who can get a TIC loan (not a lot a of lenders do it, although Affinity Guaranteed Rate does it), and those who can get one aren't putting in high enough offers for the sellers to be satisfied. The sellers bought a couple years ago though, so they unfortunately have depreciated in value since the market is correcting itself (I knew the 16% and 18% appreciation of the last couple years was too good to be true).

Another thing is that I'm pretty sure the buyer must get an appraisal of the unit and they can't make an offer above that.

You deal with the other TICs together like an HOA without the actual HOA company, which is much more lenient since you're all working together instead of being told what to do by a Board of Directors.

I heard you can pay to get the TIC title changed to a regular condo title and that makes it way easier without all the red tape. I'm not sure how that process happens though.

If I got anything wrong, please let me know! I'd love to learn more on TICs!