Tenancy-In-Common
Housing

The Reasoning

An investor buys a cap rate. A homeowner buys a home. The gap between those two prices is the strategy.

Tenancy-in-common allows a small apartment building to be sold as individual homes to individual buyers, each taking an undivided fractional interest with exclusive right to occupy a specific unit. It exists because condominium conversion in Los Angeles is heavily restricted — TIC is the structure that reaches the for-sale buyer in buildings that cannot legally be condo-mapped.

The economics come from who is bidding. An investor purchasing a three-unit building prices it on income — rents, expenses, a cap rate. Three separate homebuyers price the same square footage as places to live. On a small building that spread between aggregate unit value and bulk value is meaningful, and capturing it is the entire thesis.

The structural constraint used to be financing: TIC buyers historically needed to pay cash or take a shared blanket loan. Fractional TIC lending has matured, with multiple lenders now writing individual loans against individual interests, which is what makes the strategy executable at scale rather than a curiosity.

The tradeoff is honest and it is absorption. Each unit waits on its own buyer securing their own financing, and a sellout takes time. 5832 David returned 1.41x and roughly 17% IRR over 26 months — the most modest of our realized exits. What that project bought was a documented, executed template, which is now being applied at 1925 19th St.

What Can Go Wrong

The risks we underwrite against.

Every strategy has a failure mode. These are the ones specific to this one — the complete risk disclosure for any investment lives in its offering documents.

• Absorption is the dominant risk. Three or four units each require their own buyer and their own loan, and a slow sellout extends carry against the whole project.
• TIC buyer financing depends on a small set of lenders. If fractional lending tightens, the buyer pool narrows quickly.
• TIC ownership is less familiar than fee-simple, which requires buyer education and can lengthen marketing timelines relative to conventional for-sale product.
• Partial-release requirements with the construction lender govern how and when individual units can close, and those terms materially affect the sellout schedule.