Two basic ‘Newbie’ questions

Submitted by julesdufour2@gmail.com on Thu, 11/12/2020 - 22:42

I’m looking to buy my first property. I am in the process of finalizing my finances. I am going to use a HELOC for my first property which will most likely be a single family or duplex . Do you typically recommend a 25 or 30 yr amortization? Also should a newbie at some point think about incorporating? Thanks!

- March 16, 2021

Hi! We have been sticking with 30 year mortgages with our properties. Right now that seems to work best for us.

We currenly have 3 duplexes and one semi detached and we incorporated last year. The jury is still out on if that was a good idea or not. we truly had a terrible accounant that set it up all wrong. Make sure you have a accountant that you are comfortable with.

Also, there is a considerable amount of extra book work and accounting fees in a year with a corporation. So make sure you're prepared for that if you decide to go down that route

- March 16, 2021

I’m looking to buy my first property. I am in the process of finalizing my finances. I am going to use a HELOC for my first property which will most likely be a single family or duplex . Do you typically recommend a 25 or 30 yr amortization? Also should a newbie at some point think about incorporating? Thanks!

- April 21, 2021

Salut Jules, that is an excellent question...for your accountant AND your lawyer. For our first live event for The REITE Club in Burlington in March-2017, we brought 5 experts on stage and asked each of them to aanswer this question: should I incorporate? We had an accountant, a lawyer, a realtor, a mortgage broker and an insurance broker. And bottom line, their answer invariably was "it depends"...on your goals, on what strategy you want to use, on whether you plan on buying 2-3 rentals over the next 10 years...or 100 doors in the next 5 years. The 2 key people are your accountant and your lawyer...and after they each have asked you some questions and got your answers...they should talk to each other to determine if yes or no you should incorporate. There are no pre-packaged one-fits-all answers. Talk to the pros...

- June 20, 2021

In my book, the rule of thumb is to increase cash flow as much as possible and therefore to reduce your monthly payments as possible, which translates into typically using a longer amortization period. Of course, there are exceptions...

To incorporate or not to incorporate, that is the question, with many, many facets. I suggest finding yourself an awesome lawyer and an awesome accountant, giving them all the details of your plan and having them collaborate to determine the very best option for you.