What is a TIC?
TIC or “Tenants In Common” is the hot new alternative to condo ownership. With Tenants in Common ownership, the interest of each co-owner is distinct, and can be separately bought and sold. TIC owners own a percentage of the overall property with specified rights to ‘private use’ and ‘common use’ spaces defined in an overlaying Tenants in Common Agreement (TICA) similarly to Covenants Conditions and Regulations (CC&Rs). In English? Essentially TICS function very similarly to HOAs, but typically have very low community fees as most elements are individually owned and maintained.
Why are TICs gaining popularity?
TICs are an awesome condo alternative. Not into large buildings that feel like apartment living? Check out the LA TICs. Owning a TIC typically looks and feels much more like owning your own home, not just a small unit in a large building. Often TIC units have rich character or appealing quirks you won’t find in condo complexes. The boutique feel of TIC communities (typically somewhere between 2-4 units) offer owners a sweet little community in the big city.
Additionally, as conventional mortgage rates have skyrocketed, interest rates on TIC homes have stayed fairly steady and are running below the prime conventional rate.
What’s the drawback?
Currently, the main limitation with TICs is the variety of lenders—there are currently only about 4 lenders that offers loans for TIC homes in Los Angeles. San Francisco, where the TIC concept originated, has a wide variety of lender options, but it’s still new and growing in LA. The positive sign is that a couple of years ago there were only 2 lenders in LA and now, that’s already doubled!
Is a TIC right for me?
If you’re looking for a home with character and quirks under $1 million in Los Angeles, a TIC might be the perfect fit. Often, TIC units are priced under $1 million (some a little above), with the smaller 1 and 2 bedroom TIC homes priced under $800,000. These offer first-time home buyers a great option to get away from the apartment feel of condo living while not breaking the bank.
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