Trade active landlording for passive real estate ownership.

§1 Tenant-in-Common Interests

Deeded fractional ownership.

A TIC structure lets up to 35 investors each hold a deeded, undivided fractional interest in a single property — often larger commercial or multifamily assets than any one of them could buy alone. Each co-owner receives a proportional share of the income and, under IRS Revenue Procedure 2002-22 guidance, TIC interests are generally usable as 1031 exchange replacement property.

What owners like: real deeded ownership, professional management, access to institutional-quality assets, and continued tax deferral. What deserves caution: major decisions can require co-owner unanimity, financing is more complex, and your fortunes are tied to co-owners you didn’t choose.

§2 Delaware Statutory Trusts

Beneficial interests, fully passive.

A DST holds title to real estate — commonly apartment communities, industrial, medical, or net-lease assets — and investors purchase beneficial interests in the trust. DSTs qualify as like-kind 1031 replacement property, usually carry lower minimum investments than TICs (often $100,000 or less of exchange equity), and require no decisions from investors at all: the sponsor manages everything.

That total passivity is both the appeal and the constraint. Investors have no control over operations, refinancing, or the timing of sale, and DST rules restrict the trust from raising new capital or renegotiating debt, which limits flexibility if conditions change.

§3 The Honest Trade-Offs

Passivity has a price. Know it before you pay it.

• Illiquidity. There is no ready resale market. Plan on holding for the full 5–10 year term.
• Fees. Sponsor acquisition, management, and disposition fees reduce returns relative to direct ownership. Ask for the full fee load in writing.
• No control. You are trusting a sponsor’s judgment entirely. Sponsor track record is the single most important diligence item.
• Return profile. Distributions are typically steady but modest; these are income vehicles, not growth plays.
• Suitability rules. These are securities, generally offered to accredited investors through licensed professionals — which is who should be advising you on them.

Ironwood does not sell TIC or DST interests, and nothing here is a recommendation of any investment. We buy properties. This page exists because owners who sell to us often ask where their equity can go next, and we would rather you understand these vehicles clearly — drawbacks included — than hear only a sales pitch.

This information is educational and is not tax, legal, or investment advice. Every situation is different — consult your CPA and attorney before making any decision.