The advantages of ICT over LLC

“Isn’t ICT the same as LLC”? “Don’t they both offer the same benefits?” “Why should one choose an ICT deal over an LLC”? If you are reading this article, I am sure you must have asked yourself these questions over and over again. Well, I’m here to help. Let me answer all of your questions and show you why ICT is a much better option than traditional LLCs.

Before going any further, it is prudent to first differentiate the two terms that we will be dealing with, that is, to get a clear understanding of what is an ICT and what is an LLC. A TIC, or a lease in common, is an agreement that allows an investor to buy a property that has multiple owners while simultaneously maintaining all the rights that a single owner would have. On the other hand, a Limited Liability Company (LLC) or other limited partnerships included of one or more general partners that fulfill the functions of an ordinary partner, while one or more special partners are responsible for paying the debt of the company beyond of the amount of money. contributed as capital.

It cannot be denied that LLCs and other similar entities provide a variety of liability protection and management benefits that direct fractional ownership arrangements, such as TICs, cannot. So why, then, should one choose a TIC over an LLC?

You see the way LLCs make life miserable for an investor is when the arrangement is used by joint ownership groups that occupy part, if not all, of the jointly owned property. In such cases, Limited Liability Companies simply do not cut it because the legal and tax disadvantages created by these entities so far outweigh the benefits that they make the entire company seem worthless.

In contrast, an ICT deal has a lot to offer investors. To begin with, an investor is blessed with a great deal of purchasing power. Small investors, who may not have even been able to dream of a certain project because the costs were too high, can easily become part of the project because they can pool their resources and make large purchases together. In addition, the fact that ICTs are managed by a team of real estate professionals, known as ‘Sponsor’, enables the power of professional project management for investors. The advantages of having this Sponsor are multiple. First of all, decision making becomes much more effective than anything possible under an LLC arrangement.

Furthermore, an ICT owner is guaranteed a stable monthly income. Some might argue that this income is the same as the cash flow received under a single tenant agreement. However, these people forget that the tenant is still the responsibility of the landlord in an LLC agreement, whereas in the case of TIC, the Sponsor establishes the agreement and thus provides highly reliable tenants. Also, as these TIC backers deal with many properties, they can gain great influence when dealing with lenders. Therefore, the Sponsor could achieve very favorable financial agreements for the TIC and its owners.

Furthermore, since ICTs have small upfront costs, they allow investors to diversify and reduce their risks by buying two or more types of properties. This is substantially beyond anything that LLCs can offer as LLCs and other similar entities may require large minimal cash injections that can tie up too much money from an investor, leaving them at the mercy of a single project.

So all said and done, if you ever have to choose between an ICT deal and an LLC, the decision should be simple and straightforward; ICT rule!

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