Home Valuation of TIC
Converting to a TIC: How will it effect my valuation?
Converting an existing building to a TIC will likely increase the overall value of the property. The reason is that a TIC enables more buyers to access the market. This increased demand tends to drive up the price of a given unit and, collectively, the entire property. It also reduces an owners hold risk as there are simply more people in the market to buy single units than there are multi-unit buildings.
Sellers benefit from TIC status through higher sale prices (see previous item), increased marketability of the property (more buyers), and lower hold risk (less chance of nobody buying the property).
Buyers benefit in that they get to maximize their buying power. By pooling their resources with other buyers they can access much more real estate collectively than they could individually. There are a limited number of single family homes and condos in San Francisco so tenancy in common opens up home ownership opportunities to many people who otherwise may have been priced out of the market.
Valuing one TIC co-owners shares independently
It is important that each TIC co-owner realizes that their ownership shares can be valued independently of the other co-owners. For example, one TIC co-owner may renovate their unit and make it far more desirable than the owner across the hall (who may occupy a unit of similar square footage). The TIC shares associated with the renovated unit may be valued at re-sale at a much higher amount than the un-renovated apartment. Just because one TIC co-owner sells for x does not mean that all the TIC shares are therefore worth x.