Should I incorporate myself before I buy investment real estate properties?

I've heard some people say that it's good to incorporate yourself before you invest in real estate properties while others say there's no real benefit to it, at least not until you've got a few properties under your belt.

My question is, should I incorporate before I buy my first real estate investment property? And if not, when should I incorporate?

Answer:

As most lawyers and accountants I have heard comment on this very question: It depends.

What is your long term plan for your real estate portfolio? the particular property? what is your exit strategy for this property? Are you the only person involved or do you have partners?

From a litigation point of view, incorporate to isolate liabilities.

From financial perspective, it really depends on your strategy and overall portfolio.

From an entrepreneurial point of view. Just do it. Assuming your first deal is a single family home or a 2-3 unit. Buy the property under your name. This reduces delays in your actions, simplifies the transactions.

If you then find that real estate investing is really where you want to focus, then you will have a better idea of your needs within the corporate structure, as you have begun and possibly refined your goals and plans based on your experience.

If you find that at this time you will not expand your portfolio, you have saved time and money as well as the onging cost of administering your corporation.

As for liabilities. Make sure you have adequate blanket liability insurance and seing that you would have only a few units, your liability would probably be reasonable.


Views: 3146        Posted on: Apr 10 2012        Tags: Buyer, Incorporate, Corporation