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By Jason Heath, CFP on April 7, 2025
Estimated reading time: 5 minutes

By Jason Heath, CFP on April 7, 2025
Estimated reading time: 5 minutes

What to consider when deciding to incorporate a company with friends to buy real estate and more.

With a group of 10 friends, we are planning to create a corporation or holdco to purchase real estate property. We are planning to put together $150,000 in the corporation’s name and operate.

The corporation will also generate revenue streams through vending machines, ATM machines, and stuff like that.

Could you please share your opinion on that and advise if there is anything we should consider?

—Gael

It sounds like you have some interesting investment ideas and a big group of people who may also be on board, Gael.

I will touch on some of the legal, tax and practical considerations in a case like yours for creating a corporation with friends.

When you run or buy an asset like a rental property, it can have multiple owners. Joint real estate is typically held by spouses, but occasionally, other family members may own real estate together.

There is no requirement to set up a corporation to buy real estate with several owners, Gael. But for you, it may make sense, given there are multiple assets that may be purchased, and since there are so many unrelated owners.

A business venture—like a vending machine, an ATM machine or a lemonade stand, for that matter—can be owned personally without using a corporation.

If you are the only party, you would use a sole proprietorship. If you have partners, you can have a partnership. The professional costs, like legal fees and accounting, may be less than with a corporation, and the income is reported on your personal tax return.

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