Sunday, October 24, 2010

Sharks are Patrolling the Distressed TIC Market

As some Tenant in Common owners are learning (myself included), the latest affront to owners is keeping your property(s) afloat. Also, there are now sharks circling distressed properties in the continued downtrend in commercial real estate – specifically TIC's.

A couple of reasons are they can buy the properties at deep discounts, and in a few years (or sooner) have income generating commercial real estate. The current "predictions" from experts are at least another 5-8 year wait from today for any possible return to fruition. This is if you bought in or around 2005-07.

Some of the companies doing the circling of foreclosed or soon to be foreclosed TIC's / commercial real estate are the very same people who sold thousands of us a bill of goods. They may come at us under a different moniker.

I know I personally would NOT trust the people who sold me my TIC's. The "guarantee's" they proffered weren't worth anything. The management they had in place robbed from owners, etc.

How about DBSI or FOR1031's guarantees? They simply went bankrupt and caused a huge financial burden to owners. Owners were at the mercy of the courts and LAWYERS.

In Sun1031's case they mostly bought property and flipped them. Many times they took out loans against the properties & any distributions paid were simply earlier equity from the property and not truly 'income distributions'.

The promised monthly distributions of our TIC have mostly stopped for owners. If you have a mortgage you know how tough it is to meet that obligation with the weak lease rates and vacancies.

Many properties in the TIC market are missing payments hoping for a loan modification.

Though it is possible to do this, as people have found out with residential real estate it's close to impossible to do. It's also a difficult work out with the banks.
In addition, much of the "forgiven debt" is simply added on to the back end of the loan eating up any future equity.

Be aware of anyone offering to "help your property". These are wolves in sheep's clothing. There are big companies in the TIC industry ready to pounce on our properties and leave you with nothing.

If you find yourself in that position, there's suppose to be a new company forming that will truly help distressed TIC's. I don't have details of any structures, but they hope to save people from losing all of their property(s).

The word is that the new company doesn't want to see TIC owners lose their entire investment(s) from any of the TIC's, regardless of the sponsor.

As soon as I have any more information I will pass it along. That's all i know. Hopefully the information will help some owners. If you can stave off foreclosure and hang in there until the future uptick, you still may see a return on your investment. Even if we got our initial investment back would be a win.

Let's hope for the best in these continued tough times.