Best way to set up 3-way investment (Alberta, Canada)

1 Reply

Hello Everyone,

I know there are a lot of very smart people here and could use your help on putting myself in the best situation. 

I'm looking at purchasing my 3rd income property in Calgary, Alberta, Canada. However this time I'd like to go in on it with 2 other people. 

The plan is to purchase a property and renovate it. Downpayment (20% and reno costs) All of this would be split 3 ways. Once reno's are completed we will rent the house out.  

Everyone involved knows that they cannot opt out or receive any return until the 5th year (when mortgage needs to be renewed) This will all be written in a contract. 

  • At the 5 year point our options are that we all renew the mortgage for another 5 years
  • If one person wants out the other two people can buy them out using the built up equity and new mortgage
  • Or sell the house and everyone takes their portion of the build up equity and cash 

I already have the two people picked for this that I have worked with for years. All three of us bring certain skills that will make this excel. I was just wondering what the best way to do this is. 

Is it best for:

  • Everyone to sign onto the mortgage and we have a separate contract in place drafted by a lawyer breaking out all the details out. 
  • Or do we start a company under all 3 of our names and sign the mortgage under the company? I understand this helps with liability, but not sure how this would effect taxes and capital gains? There will also be a separate contract drafted by a lawyer for this too. 

@Brandon

Your simplest bet is to buy it in your personal name. Create a JV agreement between the two of you. No need to have a corporation if it is just one property.

Who is carrying the mortgage? Just you or all three together?

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