Like any other industry, the real estate sector is subject to many market forces. While in most cases these factors can work in your favor, sometimes they can back you into a corner. If you’re on the wrong side of such an event, your holdings can be in jeopardy, and you risk losing money.
If you happen to have properties in a neighborhood that’s on the decline, your rental income might suffer. Instead of taking the hit, you’re better off exploring better investment options such as tenants in common or TIC properties.
Move to a Better Location
It’s only natural for neighborhoods to change over time but this doesn’t have to disrupt your income. Luckily, you can move your investments to a better location and increase the return on investment without breaking a sweat. By taking part in a TIC 1031 property exchange, you can offload your holdings in one location and invest in a more lucrative avenue, says 1031 Exchange Place.
It means you can sell your current commercial property at its market value and use the proceeds to get into a more lucrative property. Depending on the location, some properties are relatively immune to negative market changes. As such, these properties promise great return on investment.
Own a Piece of the Action
One distinct advantage of a property exchange is that you get to defer capital gains tax if you invest the entire sales process. It means that you can channel all gains made from the sale towards your next purchase. Under TIC exchange, you get to buy a share in a large property that’s out of your price range.
Your new holdings can be an expansive mall, a luxury hotel, a learning institution, a hospital, anything. In such an arrangement, income is prorated according to the size of your investment.
By taking part in a TIC property exchange, you can shield your real estate income for negative market forces that can ruin your income. The process offers you a chance to diversify your holdings while increasing your capital investment.