Turning Business Wealth into Long-Term Wealth: A Real Estate Guide for Alberta Entrepreneurs
Introduction: From Business Success to Financial Freedom
Renee Huse, founder of Spire Mortgage Team in Calgary, Alberta, works with business owners every day who are ready to turn their active income into passive wealth. If you’re holding surplus cash in your OpCo or sitting on retained earnings, this strategy-rich post is for you.
Let’s walk through how you can transition from business hustle to real estate-backed financial freedom—without blowing up your tax strategy.
Quick Navigation:
- Chapter 1: Accountant Planning
- Chapter 2: OpCo vs. HoldCo
- Chapter 3: Mortgages & Business Funds
- Chapter 4: Residential Real Estate
- Chapter 5: Commercial Scaling
- Chapter 6: Passive Wealth
- Chapter 7: Diversification & Protection
- Chapter 8: Why Alberta?
- Glossary
- FAQs
- Paying personal tax you didn’t need to
- Losing access to small business deductions
- Compensating yourself in a way that kills your mortgage eligibility
- Sit down early in the year with both your accountant and mortgage broker. Get everyone aligned.
- Declare your intention to invest in real estate using business funds.
- Decide whether you’ll buy personally, corporately, or through a new Holding Company.
- OpCo (Operating Company): This is your active business—the one that makes money from services or products.
- HoldCo (Holding Company): A separate company you own that doesn’t sell anything. It just holds investments, like real estate.
- You can move money from your OpCo to your HoldCo tax-free in most cases (intercorporate dividend).
- It protects your investments from business liabilities (lawsuits, debt, etc.).
- You can bring in family members as shareholders for future tax planning.
- It makes it easier to keep investment records clean.
- If you have retained earnings in your OpCo that you don’t want to pay out personally
- If you plan to build a larger portfolio
- If you want to keep your business and real estate separate
- Personally (using declared income):
Works if you already pay yourself a decent salary or dividends. Lower rates, but more tax exposure. - Corporately (HoldCo or OpCo):
Keeps the investment within your company. Mortgage will be in the corporation’s name, often with you personally guaranteeing.
Lenders ask for:- 2 years of financials
- Proof of retained earnings
- Company documents (Articles, ownership registry)
- Alternative Lenders (when income is low on paper):
Use 12-month bank statements to show cash flow.
Stated income + Letter of Explanation from your broker.
Typical terms:- 20–35% down
- Rates 1–2% higher than major banks
- 1% lender fee
- A suited home in Calgary or Edmonton
- A duplex in Lethbridge or Red Deer
- A condo near a university or hospital
- Easier approval (even with business income)
- Lower price point = smaller down payment
- Flexible usage: long-term rental, Airbnb (check bylaws), or family use
- 1% rule: Aim for monthly rent = 1% of purchase price (e.g., $3,000 rent on $300K property)
- Legal suites: Maximize rental income with two units
- Walkable location: Better tenant pool, fewer vacancies
- Mortgage + property taxes + insurance + $150/month for maintenance
- Vacancy of at least 1 month/year
- Management fees (if you won’t DIY)
- 5+ residential units in one building
- Mixed-use: residential above, retail below
- Industrial: warehouses, trades bays
- Buildings are valued based on income, not neighbourhood comps
- Lenders care about NOI (Net Operating Income) more than your personal income
- More paperwork—but more upside
- Supplements your income (e.g., covers car payment or vacation fund)
- Stabilizes your life (e.g., covers your mortgage or groceries)
- Replaces your need to work (e.g., $5K–$10K/month in net rental income)
- Hard assets that hold value
- Income that isn’t tied to your time or industry
- Refinance flexibility: pull capital when needed, without liquidating
- Buy a property using corporate funds
- Build equity through paydown + appreciation
- Refinance and redeploy equity into the next deal
- Repeat every 12–24 months
- No rent control = freedom to raise rents with proper notice
- 14-day eviction process = faster turnaround on non-payment
- Fixed-term leases = tenants move out at end of lease unless renewed
- Landlord can choose to not renew without needing a reason
- Alberta has no PST, and property taxes are lower than Ontario and BC
- Interprovincial migration is driving demand for rentals
- Calgary and Edmonton offer solid rent-to-price ratios
- Operating Company (OpCo): Your main business that generates income.
- Holding Company (HoldCo): A company that holds assets (real estate, stocks, etc.) but doesn’t actively operate.
- Intercorporate Dividend: A tax-free transfer of profits from your OpCo to your HoldCo.
- Alternative Lender: A mortgage provider outside the big banks—offers flexible options for self-employed and lower-declared income clients.
- Stated Income: An income level declared by a borrower (usually self-employed), backed by business performance or deposits.
- NOI (Net Operating Income): Income after expenses, before mortgage payments. Used to value commercial properties.
- Cap Rate: NOI ÷ Property Value. Used to estimate market value of income-producing properties.
- Debt Coverage Ratio: NOI ÷ Annual Debt Payments. Lenders look for this to ensure the property pays for itself.
- Refinancing: Replacing your existing mortgage with a new one, often to access equity or improve terms.
- Passive Income: Money earned without trading your time for it—like rental income from real estate.
Chapter 1: Why Your Accountant Needs to Know Your Real Estate Plans (Yesterday)
Most business owners wait until after the purchase to call their accountant. That’s like drawing a map after the hike. If your accountant doesn’t know your plans to invest in property, you could end up:
Here’s the right way:
Example: One client had $220K sitting in their business account and wanted to buy a fourplex. The accountant initially suggested paying it out as dividends. But that meant paying ~$90K in personal tax. We brought everyone to the table. Instead, they moved the money via intercorporate dividend into a new HoldCo—tax-free. That HoldCo bought the property. No personal tax triggered, and the investment now pays them monthly.
Bottom line: The earlier your accountant is looped in, the better your outcome.
Chapter 2: Understanding OpCo vs. HoldCo—and Why It Matters
Let’s break down some jargon:
Why use a HoldCo?
Who needs this setup?
Note: Setting up a HoldCo costs ~$1,500–$3,000 in legal and accounting fees, but pays off in flexibility and protection.
Chapter 3: How to Get a Mortgage Using Business or Corporate Funds
Here’s the truth: banks don’t love complexity. If you’re not a T4 employee with a 9–5, you’re already outside their comfort zone. But that doesn’t mean you can’t qualify—you just need a strategy.
Three ways to qualify:
Real Alberta Client Snapshot:
Operating business showed $68K net income after write-offs. Gross deposits: ~$380K annually.
Approved via bank statement program for a $600K rental property.
Down payment: 25% using corporate funds
Rate: 5.95% (vs. 4.85% AAA)
Key takeaway: If you have strong cash flow, there’s a mortgage strategy for you—even without a T4.
Chapter 4: Start with Residential—Because It’s Simpler (and Smart)
You don’t need to buy a strip mall to get started. Most of our clients begin with residential property:
Why residential makes sense first:
What to look for:
Run your numbers with your broker. Include:
Chapter 5: Scaling into Commercial Real Estate
Once you’ve got 2–3 properties, you may hit a wall with lenders. Or you may want to grow faster.
What counts as commercial?
How it’s different:
Example:
Bought: 6-plex in Edmonton for $1.1M
NOI: $62,000
Cap rate: 5.6%
After raising rents + renos, NOI jumped to $75,000
New building value = ~$1.34M — over $200K equity created without market growth
This is where real estate starts acting like a business. You control the value by managing expenses and rents.
Chapter 6: From Active Income to Passive Wealth
Your business pays you when you work. Real estate pays you even when you don’t.
Here’s the arc most owners follow:
Bonus: Real estate lets you say no.
No to the bad-fit client
No to overwork
No to undercharging
It gives you space to choose.
Chapter 7: Diversification + Protection
If your entire financial life is tied to one business, you’re one market shift away from a panic attack.
Real estate gives you:
Wealth snowball strategy:
Chapter 8: Why Alberta Is the Best Place to Do This
Legal advantages:
Economic advantages:
Real talk: $600,000 in Calgary gets you a duplex. That same amount in Toronto gets you a one-bedroom condo.
Glossary
Frequently Asked Questions
Can I use corporate funds to buy real estate in Alberta?
Yes, you can use retained earnings from your corporation to invest in real estate—either directly or by transferring funds to a HoldCo tax-free.
What’s the benefit of using a Holding Company?
A HoldCo separates your investments from business liability, enables tax planning, and keeps your records clean.
What kind of mortgage can I get without T4 income?
You may qualify through alternative lenders using 12-month business deposits, stated income, or corporate financials.
What’s the 1% rule in real estate?
It means your monthly rent should equal at least 1% of the purchase price—for example, $3,000 rent on a $300,000 property.
Why invest in Alberta over other provinces?
Alberta offers no rent control, faster evictions, lower property taxes, and stronger rent-to-price ratios than Ontario or BC.
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