Buying a rental with 2 others. How to structure partnership?

Question

Gagan P. · Answer

One thing about incorporating in Canada. Rental income counts as passive income, whereas in the US it can be easily classified as active.

To classify as active for a corp in Canada, you need to have "greater than five" (six or more) full time employees.

Joel Arndt · Answer

@Dale Barber @Zack Tremere

Mandy Branham has something over 60 properties under her belt, done with JVs. She provides a ton of practical info at her presentations.

Here's her website.

https://www.mandybranham.com/

Dale Barber · Answer

Also very curious how others have structured joint ventures. Obviously I am going to speak with my lawyer and accountant when the time comes, but other insight is always welcomed.

I have been incorporated in the past, and know the extra expenses that come with it. My mortgage broker also has brought up a few extra hurdles with real estate investing as a company, rates, loan approval process, and passive income law changes.

Any one else have input on this?

Dale

Joel Arndt · Answer

Ooh, I'm interested in hearing about this too.

I imagine incorporating will have stronger legal standing than a simple agreement. And because a rental is essentially a small business, incorporating might be the safest way to structure it. But I'm not a professional. I look forward to hearing what others have to say.