Building a Real Estate Empire

I realize that the following post may scare some readers away.  It’s not supposed to.

This post is intended as a general overview for anyone who is thinking about real estate investing but unsure about the set-up.   The following information is the result of discussions with my Joint Venture Partner, accountant and real-estate lawyer about how to best set-up a scalable real estate portfolio using a Medical Professional Corporation (MPC) or Canadian-Controlled Private Corporation (CCPC).  For the purposes of this article, I will be referring to an MPC, but this can be interchangeable with a CCPC.

I have found that this information is not readily available.   Therefore, I wanted to share what I’ve learned with others who are interested in taking the plunge into real estate.   At the very least, this post will offer a peek into how real estate investors think compared to stock/bond investors.  The flowchart below may look intimidating at first, but hopefully, you will understand it after reading this post.

If you are a physician, dentist or small-business owner, there are many different ways to structure a corporation to hold real estate.   The following is one structure that has worked well for me.  Always consult your accountant and lawyer to determine the best structure for your own situation.

For the left side of the chart, funds from the MPC flow to registered/TFSA accounts via salary/dividends, as we all know.

For the right side of the chart, fund transfers between corporations are tax-free.   MPC funds can be transferred to the HOLDCO tax-free.  These funds can then be transferred to the Real Estate Holdco and/or Corporation tax-free, to purchase investment properties and/or for renovations.  The same funds can also be transferred in the reverse direction tax-free.  The primary purpose of the set-up of the HOLDCO and its entities is for asset protection.

One of the main goals in real estate investing is to refinance the properties, therefore funds flow back to the HOLDCO or Real Estate Holdco, which are then ready to be deployed again to another investment property.   Unlike passive index investing, in which funds are static in ETFs for the long-term, funds in real estate investing move around.


Although there are different types of passive real estate investments, in my experience, I have found the 2 best ways to invest in real estate passively are:

  1. Joint Ventures
  2. Private / syndicated mortgage loans

I also invest in Private Equity (real estate development), which I will discuss in a later post.  Let’s see where we should hold these real estate investments.

Medical Profession Corporation or HOLDCO

  • Depending on your situation (accumulation vs. decumulation phase, gross income, RDTOH etc…), it may or may not be tax-efficient to hold these real estate investments in your MPC or HOLDCO
  • Private/Syndicated Mortgage Loans pay out interest income
  • Private equity (real estate development) are often structured as Limited Partnerships.  Gains are taxed as “Active Business Income” in a Corporation or as “Employment Income” in your own hands
  • Holding 1 or 2 investment properties in your MPC is debatable.   CRA/CPSO may frown upon this, as one may argue that your MPC has become more of a real estate holding corporation rather than a corporation that provides medical services.
  • Lawyers recommend to not hold properties in your MPC in order to protect your assets from any legal liability from your investment properties
  • HOLDCO acts as an intermediary between your MPC and Real Estate Holdco/Corporation (see below).  You are President of the HOLDCO.

What do I do?   I do not hold any real estate investments in my MPC or HOLDCO

Registered/TFSA Funds

  • Although you can hold private/syndicated mortgage loans or private equity investments in your MPC or HOLDCO, it is way more tax-efficient to hold these investments in your registered /TFSA accounts, since the interest income / limited partnership income are sheltered in these accounts
  • Private / Syndicated Mortgage Loans (Annualized return 8-14%)
  • Private Equity (Real Estate Development) Annualized return 20+%
  • After a successful exit from a loan/deal, find another loan/deal and reinvest your funds.  Rinse.  Repeat.
  • Registered/TFSA accounts need to be held at certain institutions that can accommodate these types of investments.  The institution most often used by real estate investors is Olympia Trust.  Another institution is Community Trust

What do I do?  I hold private mortgage loans and private equity (real estate development) in my registered/TFSA accounts

Residential vs. Commercial

Before we discuss where to hold investment properties, we need to first clarify what is considered residential vs. commercial.

Most people assume that a commercial property is one that includes a retail unit or plaza, or unit within an office building.  The problem is that the definition of “commercial” can vary depending on who you are speaking with.   A realtor, banker or accountant may have different definitions.  For the purposes of real estate investing, we are only interested in the bank’s definition.

An additional note is not to confuse a multiplex property (what we are talking about), which has separate suites with its own entrance and each being fully self-contained, with a residential house (student housing) that has multiple rooms rented out.   Totally different properties.

Bank’s Definition

A single unit, duplex or triplex will be considered as a residential property for mortgage purposes, therefore bank’s will offer residential mortgages for these properties.

Almost every bank will also consider a four-plex as a residential mortgage, however, for some banks, this is sometimes the cut-off point.

A “five-plex” is in the grey-zone.  Most residential lenders opt out at this point and your broker will have to search around to find a lender who will treat this as residential.

A “six-plex” is where 99% of the ‘residential’ bankers have now opted out.  Beyond a six-plex, you will be dealing with commercial mortgages.  This is now a different sandbox that you are playing in with different rules.

What difference does it make if a property is considered commercial or residential?

The simple explanation is that with residential mortgages, you (the borrower) were the main focus and the property was secondary.   Similar to when you apply for a mortgage for your principal residence, the bank will focus on your income and debt.  Residential mortgage rates are usually lower than commercial mortgage rates.  You need 20%  for down payment.

With commercial mortgages, the property becomes the main focus and you become secondary.  The bank will focus on the property’s rents and expenses.   Commercial mortgage rates are usually higher than residential mortgage rates.  You need 25-35% for down payment.

Real Estate Holding Corporation (5-plex and below)

  • Hold 2-3 residential investment properties in Real Estate Holdco.  You are President of this corporation.
  • You do not want to hold too many properties in 1 Real Estate Holdco, in the event that there is a legal liability with 1 of the properties
  • Residential mortgages can be under your name in which you hold the property “in trust” for the Real Estate Holdco
  • Some banks will allow mortgage title to be under the Real Estate Holdco, but qualify for a residential mortgage rate
  • A separate Joint Venture Legal Agreement is signed by your partner and yourself (50:50 partnership)
  • Once the Real Estate Holdco has 2-3 residential investment properties,  a new Real Estate Holdco is established to hold additional 5-plex and below investment properties.   Rinse.  Repeat.

What do I do?  I hold 3 residential investment properties per Real Estate Holdco

Corporation (6-plex and above aka “small apartment building”)

  • Hold a single small apartment building (6-plex and above) in a corporation
  • Requires a commercial mortgage
  • JV partner and yourself will be 50/50 partners in this Corporation (i.e. President and Vice-President with equal vote)
  • A separate Joint Venture Legal Agreement is signed by your partner and yourself (50:50 partnership)
  • Rinse and repeat for additional apartment buildings
  • If I were to generalize a bit about real estate investors, the goal for most of them is to eventually play in this sandbox, since these returns can be very lucrative

What do I do?  My JV partner and I open a corporation for each small apartment building in our portfolio


  • As I mentioned previously in my article “Checklist For A Passive Real Estate Investor“, one of the steps is to open up a Home Equity Line of Credit (HELOC)
  • You can transfer funds from your HELOC, as a “Capital Contribution by owner” to your HOLDCO, which can then be used for down payment for property purchases or renovations
  • Interest payments for funds withdrawn from your HELOC are tax-deductible in your hands

What do I do?   I use funds from my HELOC for investment property purchases and renovations when my other funds are tied up with other investments


  •  A general overview for any physician, dentist or small-business owner interested in learning how to structure their real estate portfolio (hopefully I haven’t scared anybody away!)
  • There are many different ways to structure a real estate investment portfolio, but I have found this scalable structure to work well for me
  • Even without a HOLDCO and its entities, ANYBODY can invest in real estate passively via private/syndicated mortgage loans and/or private equity with registered/TFSA or MPC funds
  • Always discuss your specific situation with your accountant and lawyer to determine the best structure for you

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Dr. NetworthKushDr DWGTA MDDr. L Recent comment authors
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Dr. MB

Hello DN, That was an excellent overview. I have used many of your variations. But my accountant just tells me what to do. However, he is an experienced real estate investor himself and not all accountants know the ins and out of RE investing. That is particularly why posts such as these would have been helpful. The reason we ended up with so much cash was because we were planning to buy a small apartment building. But I am concerned with the tax changes. If they end up simply negating my efforts with taxes at the terminal point, I figure… Read more »

Loonie Doctor

Wow DN! This is an outstanding article and fills a key knowledge void in the doctor/professional investing world. I don’t invest in real estate at this point, but I know that many docs do. Important for them to read something like this because it seems that there is a lot of variability in how people set up or the advice that they get.

BC doc.
BC doc.

Thanks for the summary!

I own REIT and invested in 2nd mortgage, but not in actual buildings. Partly due to a study I read that showed REIT had same return as owing a property. Thinking back, maybe it didn’t include leverage. But the bigger reason was it seems too much work to deal with tenants, repair etc. I have been thinking about real estate more lately, hoping to increase returns.

In your experience, what’s the likely return for different type of real estate? (Own building with partner, reit, pe, 2nd montage etc. )


Hi DN, I haven’t strayed from the passive arenas but am curious about the levels of taxation with these options. Passive/active income?, and typical % for expected deductions. Also what are the costs of setting up and maintaining each group of 2-3 property corps.

Thanks for the great info, helps break the glass.

Debt Free DDS

Hello: I have 5 real estate crowd funding deals and 2 apartment syndication deals. What do you recommend I do in order to maximize taxes on each?


Hello DN, excellent post and thank you for sharing! My spouse (who is a physician) and I are considering setting up a similar structure and have a couple of questions I’d appreciate your thoughts on. – You mentioned that physician needs to be the president of Holdco and Realstate Cos. Is that the only requirement or do corporations need to own shares of each other to enable this structure including intercorp transfers? – We don’t plan to invest in more than 2-3 properties and thinking of owning them directly in Holdco. Are there any benefits to separating Holdco and Real-estate… Read more »


Hello! Great post! Can you clarify that you are able to transfer $ from a medical corp to a holding company tax-free and then invest in real estate?

Dr. AZ
Dr. AZ

Great article but the fortunately some provinces like Ontario do not allow MPCs to create holding companies so all assets are to be held in MPC

Paul Smith

Thanks for sharing this helpful article. I really appreciate your efforts. Keep going!

Dr. L
Dr. L

Hi Dr. NW,

I am a Canadian physician, newly staff. I want to buy real estate through a joint venture with a partner. A fiscalist I consulted recommended setting up a MedCo + Trust instead of MedCo + HoldCo, and to buy real estate from the trust.

Is this something you have seen/would consider?


Just following on a post from a few weeks ago:
I am interested in using the model you describe. How would this inter-corporate transfer be structured as to not have the draws from the MPC attributed as dividends to me? The structure my accountant was aware of involved loaning the money from my MPC to the HOLDCO and paying interest at the CRA prescribed rate.
(I would also be interested in a recommendation for a new accountant if you would feel comfortable letting me know who you use. Thanks)


This was a great article and just what I was looking for. I just wanted to confirm I understand the process correctly. Hypothetically, if I am incorporated (MPC) and wanted to use corporate income to purchase real estate (ie. a personal home), I would create a HoldingCo, then transfer retained funds in the MPC (ie. business income s/p corporate tax) to this HoldingCo (at no charge). The HoldingCo would then use those funds to purchase (in whole, or partially) a property. That’s my understanding. Now with all that being said, would I, an employee of MPC, be able to live… Read more »


Hi DN, do you hold commercial properties in your Holdco under/within the MPC? Is there any reason you would not do so? From the real estate investment structure you outline here my impression is that you hold those properties outside the MPC and I am wondering if this is the case, and if so why. Thanks for a very informative post!