What are the advantages of TICs for both buyers and multi-unit property owners in Santa Barbara?
Tenants-in-Common (TIC) ownership offers a creative, cost-effective way to increase homeownership opportunities in high-cost areas like Santa Barbara. Whether you're a first-time buyer looking for affordability or a multi-unit property owner exploring new strategies to access equity, TICs can be a game-changer.
What Is a TIC?
A TIC, or Tenants-in-Common agreement, allows multiple buyers to co-own a multi-unit property while maintaining exclusive rights to individual units. Each co-owner holds a fractional deed and secures a separate mortgage - known as a fractional loan - that applies only to their share.
Unlike traditional condo conversions, TICs do not require city or state approval for buildings with four units or fewer. That makes TICs faster and more affordable to create, opening new doors for local homeownership.
For Buyers: More Affordable Entry into Santa Barbara Real Estate
In a market where only 10% of residents can afford a median-priced home, TICs present a rare and welcome opportunity. Here's how:
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Lower Price Point: TIC units typically cost 10–15% less than comparable condos.
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Exclusive Ownership: You gain sole occupancy of your ownership interest, just like with a condo or single-family home.
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Resale Flexibility: You can sell, transfer, or will your TIC interest at any time.
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No Need for Permits: TIC purchases bypass the lengthy permitting process of condo conversions.
If you're a first-time buyer, TICs offer a realistic and reliable way to break into homeownership without compromising on quality or location.
For Sellers: Unlock Equity in Multi-Unit Properties
If you own a duplex, triplex, or fourplex, converting your property into TIC units could be a win-win move. Here's why:
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Sell Individual Ownership Interest Without Subdivision: You can sell each ownership interest separately without needing a lot split.
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Access Equity Without Giving Up Income: Sell one or two interests and retain rental income from the rest.
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Potentially Avoid Capital Gains with 1031 Exchange: Use proceeds to reinvest and potentially defer taxes. Please consult with your trusted tax professional.
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Simplified Process: No city or state approvals required for residential properties with four units or fewer.
Santa Barbara also has a high volume of all-cash buyers who can help overcome initial financing limitations while local banks work to establish better fractional loan options.
Why TICs Make Sense in Santa Barbara
Santa Barbara is facing an acute housing affordability crisis. TICs represent a proven model - already successful in cities like San Francisco and Los Angeles - that provides more inventory, more flexibility and more opportunity for both buyers and sellers.
By embracing TICs, you're not just completing a transaction. You're contributing to a more accessible, inclusive housing market.
Let’s Talk About Your Options
If you're a buyer searching for an affordable path to homeownership, or a multi-unit owner ready to explore new ways to maximize your investment, we're here to help you navigate the process.
Schedule a consultation with Dianne and Brianna Johnson, your trusted Santa Barbara real estate agents, and discover whether TIC is the right fit for your goals.
Dianne & Brianna Johnson, Village Properties. DRE# 00947199 & 01943572. All information is deemed reliable, but not guaranteed. We recommend individuals make their own inquiries.
