Ryan Price

This is the second installment on how we bought our first income property. You can read the other posts here:

How we bought our first income property – Part II (Market Research)
How we bought our first income property – Part III (Due Dilligence)

The process of buying any type of property can be daunting.  Buying investment property adds a little more complexity.  Buying the property we ended up choosing resulted in more obstacles to overcome along the way.

At the time of writing, we are about three weeks from closing on the property that we have been working on since early June.

In the next few posts I’ll take you through our process and give you a look at how we prepared, why we chose this property, and the obstacles we encountered along the way.

Setting up the Company

We plan on building a portfolio of investment properties over time.  For a variety of reasons ranging from liability to tax benefits it made sense to incorporate a company to hold the houses rather than hold it under our own names.  The incorporation process wasn’t difficult but we decided to hire someone to take care of all the paper work.  This ran us about $600 and took care of all the filing with the government and the set up of all the initial documents (articles of incorporation) that specify name of the company, director roles, ownership percentages, purpose of the company, company charter, etc.

Once we had our articles of incorporation and our corporation number (you get this from the government after everything is processed) we were ready to open the business bank account.  We went with the small business account at RBC.  They charge $6/month for minimal transaction volumes which suited our needs nicely.

The next piece of the puzzle was some documentation to get us started outlining the terms of the Joint Venture deals we were planning on using.  We didn’t want to pay a lawyer to write the  legalese from scratch so we had been looking elsewhere.

In fact, in the months leading up to this we were doing a whole lot more than looking.  I started taking the necessary courses to become a Realtor in Ontario.  At the same time we were absorbing as much experience as we could from others who had walked the walk.  One of the best resources we found was Julie and Dave over at RevNYou.  They are seasoned real estate investors based out of BC that have a great starter package for JV partnerships.  We ordered the package, and used many of the templates they provided as the starting point for our own documents.  We also joined their mentoring program which provided a wealth of information through calls with experts and the simple act of sharing past experiences.

The company was incorporated, the bank accounts established, and our contracts prepared.  We were theoretically ready to purchase.  All we needed was a quality income property and the funds to buy it.  Minor details, right?