BEST ANSWER
Aaron,
The easiest TIC's to sell are in 2-unit buildings because with 2 "owner occupiers" you can skip the lottery process and convert to Condos after 1 year of residency in the building. The next easiest are 3 to 4 unit buildings because they are still considered "residential" in the eyes of lenders, and have the possibility of being converted to Condos, albeit through a very lengthy lottery process. Finally, 5 to 6 unit buildings have similar condo conversion rules as 3 & 4 unit buildings, whereas 7+ unit buildings can't convert. So 7+ unit buildings are the least valuable as TIC's, but I would not rule them out thanks to the proliferation of individual loan TIC lenders. A Buyer now doesn't "need" to convert to a condo in the same way they felt they did before individual loan TIC lenders.
If you're selling off the units as individual TIC's the Buyers are going to consider the number of units as I've (very generally) described them above and be willing to pay more for a building with fewer units, again with a 2-unit building being the ideal. But whether or not there have been any Ellis Act or other types of evictions impact value and ease of liquidity as well.
If you don't have an agent and would like to work with someone who can help you evaluate each possible purchase on it's own merits, feel free to contact me and my team. I'd also recommend googling "sirkin & TIC" for more information on TIC rules and laws. I'm not an attorney and can't provide legal advice, but I can provide opinions on value and ease of reselling either as an entire building or individual TIC's. My team and I have been on both the Buy & Sell side of quite a number of TIC's.
Mon Apr 14 2008, 19:15
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