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.
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?
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing