NEW INVESTOR IN CANADA, NB

[Randy McKillop]

Hey BP fam! 

I'm located in Plaster Rock, N.B CANADA. I'm new to the idea of real estate investing. In 2019, I tried flipping a property in a town 30 minutes from me. It wasn't a grand slam, by any means, but it was a base hit that got me excited about real estate. Last year, I purchased a bank repo and turned it into a house hack where the rental income is more than paying my mortgage. It's now 2021 and I'm looking for my next deal. I currently have two accepted offers on the table -- now to decide which one to take. 

The biggest question I have right now: Should I incorporate or operate as a sole proprietor?

My concern with a sole proprietorship is the liability that it brings. I am able to get great financing with banks, etc -- but the liability is there. However, once you incorporate, financing and taxation become a big deal. Is an incorporation worth it in the long run? 

Any advice from my fellow Canadian friends would be very helpful! Thanks! 

Randy

[Jordan Perry]

Hey Randy, 

I would definitely suggest reaching out to a real estate specific accountant to create a plan for you taxes. I use one that i would be happy to refer you to if you would like to P.M me. 

As for the financing piece, as an investor focused mortgage associate (licensed in NB) it is still possible to get financing through a corporation, however it does limit us to the lenders that we could use to pull it off. You yourself will still need to be a guarantor for the loan, but you get the tax benefits of keeping it in a corporation. 

My personal thoughts on incorporating, is that if you want to grow your net worth and portfolio, a corp is a good way to avoid more taxes, but if you want to grow your cashflow now, a few properties in your own name wont hurt. I think most people create a corp eventually, but its totally up to you and your specific needs. 

Please feel free to P.M me if you would like to chat more about this or financing :)