In an exchange, 45 days passes in the blink of an eye. FlexTIC addresses all constraint issues with an economic investment that gives the investor in an exchange what they need most-time.
A myriad of scenarios plays out in 1031 exchanges causing investors to make poor or hurried decisions: a suitable property cannot be found; a purchase agreement is not executed; due diligence is not completed or obstacles are discovered; the replacement property is smaller, leaving uninvested dollars and creating taxable boot; multiple investors in one property would like to dissolve their real estate entity and go their separate ways, etc. If the replacement property is not under contract with completed due diligence within the 45 day period, there is the risk that the transaction will not be completed and the exchange will be lost or possibly worse, the wrong investment decision will be made with even more costly results. Investors are freed from the time constraints of the 1031 Exchange rules by completing an exchange into and out of a FlexTIC property, providing time to evaluate investment goals and solutions on the investor's timetable.
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FlexTIC owns high quality, long-term leased properties, typically a single credit or national tenant, with a 10-20 year triple net lease in place--held by FlexTIC exclusively for identification or sale to exchange investors.
An 'inventory' of tenant-in-common, co-ownership (TIC) interests in high quality, long term leased properties are owned by FlexTIC and made available exclusively to FlexTIC investors to identify or purchase. The investor enters into a purchase agreement and completes a purchase of a deeded, undivided interest in a FlexTIC property handled through a national escrow and title company. This availability of varying size interests virtually eliminates any risk of not being able to identify or purchase a suitable replacement property within the required 45 day identification period. In addition to the ownership of the properties, FlexTIC coordinates the exit of investors from FlexTIC by repurchasing FlexTIC interests from investors which, in turn, makes those interests available to more investors. Thus, there is assured a constant supply of tenant-in-common interests of flexible investment sizes to accommodate most investors' needs. Today's available properties. |
Matching replacement debt with FlexTIC's in-place credit facility from a national lender, financing is quickly available and can be matched exactly to each investor's replacement debt requirement.
Exchange rules require an investor to replace debt that existed on the relinquished property. Difficulties arise in three scenarios: time constraints preclude new financing; a seller of a replacement property requires existing debt to be assumed, and; in most TIC transactions where debt is incurred, the investor must assume debt in the same ratio as equity (i.e. for a property with 50% debt, an investor must assume the same ratio, thus with $1 million of equity the investor must assume $1 million of debt). With FlexTIC, debt is available from an in-place credit facility structured as an exact match to an investor's debt replacement requirement (subject only to investor underwriting). This means investors with no debt or low debt ratios are not forced to take on additional debt and those with higher debt ratios are not faced with taxable boot issues. |
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With prearranged low transaction costs and a deferred sponsor fee, FlexTIC allows an investor to structure a transaction to earn a positive return (net of all transaction costs) on the investor's equity.
Investment in a quality property with reduced transaction fees and costs allows a transaction to be structured to provide a positive return on the investor's capital. With an investment in a single-tenant, long-term triple-net leased property, the investment risk is minimized and the cash flow can be expected to be stable and predictable. With pre-arranged financing together with pre-arranged escrow and title services, FlexTIC is able to offer extremely low transaction costs and provide an investor with a clear picture of the economics of the investment in a FlexTIC property before the investment decision is made. Unlike other TIC business models, FlexTIC's sponsor fee is not 'front loaded,' but is earned at the end of an investor's investment, when FlexTIC buys the TIC interest back from the investor, further enhancing the transaction economics. Read More |
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A unique call option facilitates the sale of the investor's FlexTIC investment back to FlexTIC in order to complete a future exchange. FlexTIC retains a uniquely structured 'Call' option to repurchase the investor's interest, allowing the investor to exchange out of the FlexTIC property and exchange into another property of their choosing. The call option gives FlexTIC the right to repurchase the investor's interest as opposed to a 'put' option that gives the investor the right to force FlexTIC to repurchase the interest. In accordance with IRS guidelines, a put option puts the transaction at risk for compliance as a qualified 1031 exchange. The investor is assured of performance on the call option since FlexTIC is economically motivated by the fee structure with fees earned only when the call is exercised and the buy back is completed. Furthermore, the business model for FlexTIC is only achieved by the exercise of the call option, adding the TIC interest back to 'inventory' and making it available to other investors. |
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Flextic Difference
