Saturday, February 09, 2008

Should I Buy a TIC?

My hairdresser is a darling 30-something gay man. Today while cutting my hair he asked, "Should I buy a TIC?" I thought about it. Everything (with the exception of the condo lottery) has gone right for me. My building is a historic gem. Our neighborhood has completely turned around and is now a desirable place to live. My building partners have been responsible, collaborative, hard-working people. The real estate boom let me earn $150,000 tax free and flip that into a larger unit when my neighbor decided to sell.

But it's not 2000 anymore. The real estate surge is over. Condo conversions have effectively been halted. TIC fractional loan terms are burdensome.

On the other hand rents are sky high and you don't want to invest all the money you may have saved in this stock market.

So on balance I'd say the old rules apply. If you are going to be living in the same town for at least five years, if you have a steady and predictable income and you can easily afford a 20% down payment, and if you are paying as much in rent as your mortgage would cost - go ahead. Just be careful what you buy. Location, location, location. Negotiate, negotiate, negotiate. It's a buyer's market. Try to imagine not just yourself living in the place, but yourself five years from now trying to sell it.


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