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Mar 12, 2025reading time icon12 min

Is it possible to invest in real estate with a small budget?

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Is it possible to invest in real estate with a small budget?
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Whether you're a beginner or an experienced investor, real estate is one of the best ways to diversify your portfolio. Did you know that there are options available for all budgets? 

Even a small investment can grow in value over time. Learn how to maximize your chances of success and invest in real estate, even with a modest budget. 

Why invest your money in real estate? 

Despite some risks, real estate is generally considered a stable and profitable investment. It often generates passive income, delivers strong returns, and benefits from long-term property value growth. With a variety of opportunities suited to different investor profiles, real estate is an excellent way to build lasting and sustainable wealth. 

Is it possible to make a small investment that generates returns? 

Yes, it’s absolutely possible to invest in real estate with a small budget. The key is to start small and gradually expand your portfolio. By purchasing your first property, you can use the equity built over time to invest in larger properties, allowing you to diversify your investments as you grow. 

How to invest in real estate in Quebec: indirect and direct investment 

In Quebec, there are two primary approaches to real estate investment: indirect and direct investment. Each of these options offers distinct advantages and may be suitable for different types of investors. Let’s explore these two approaches in more detail.  

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Indirect real estate investments 

Indirect real estate investment involves putting money into real estate without directly owning properties. Instead, investors purchase shares or stocks in financial vehicles that own and manage real estate. This type of investment generates passive income without the need for direct management of properties or tenants, making it especially appealing to those looking to diversify their portfolio while minimizing risks. 

Indirect real estate investments are a great way to earn returns, even with a smaller budget. By reinvesting your gains over time, you can gradually diversify your investments and open up more opportunities for growth. 

1. Real Estate Investment Trusts (REITs) 

Real Estate Investment Trusts (REITs) are companies that own and manage income-generating real estate properties. They provide investors with the opportunity to buy shares in the company with a relatively small initial investment, in exchange for a portion of the regular income through dividends. 

What is the minimum amount to start? 

The minimum amount to invest in a Real Estate Investment Trust (REIT) is typically quite low, making it an attractive option for investors with a smaller budget. Since REITs are publicly traded, you can simply buy shares on the stock market. Starting with a few hundred dollars is possible, depending on the price of the shares. Generally, the price of a REIT share ranges between $10 and $50, although some specialized REITs may have much higher share prices. 

2. Exchange-Traded Funds (ETFs) specializing in real estate stocks 

Exchange-Traded Funds (ETFs) that specialize in real estate stocks invest in publicly traded companies across various real estate sectors, such as construction and property management. By investing in an ETF, you gain broader exposure to the real estate market while diversifying your portfolio, as each ETF share includes stocks from multiple real estate companies. 

What is the minimum amount to start? 

The minimum amount to invest in a real estate ETF is typically affordable. Since ETFs are publicly traded, the investment required depends on the price of each share. Generally, ETF shares range from $20 to $100. Therefore, it is possible to start investing with just a few hundred dollars. 

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3. Real estate mutual funds 

Real estate mutual funds pool the capital of multiple investors to acquire real estate properties or shares in real estate companies. This type of investment allows you to enter the real estate market with modest capital while benefiting from professional management. 

What is the minimum amount to start? 

The minimum amount to invest in a real estate mutual fund varies depending on the fund and the financial institution you're working with. Typically, the required investment ranges between $1,000 and $5,000. 

4. Equity crowdfunding 

Equity crowdfunding allows multiple investors to contribute to the financing of real estate projects, such as the construction or renovation of buildings. This investment model offers the opportunity to invest with relatively modest amounts and receive returns based on the project's performance. 

Although crowdfunding is still relatively new in Quebec, it is becoming an increasingly attractive option, particularly for small investors who want to get involved in specific real estate projects. 

What is the minimum amount to start? 

The minimum amount to get started in equity crowdfunding varies depending on the platform and the project. In general, you can begin investing with relatively small amounts, typically ranging from $100 to $1,000. This allows investors with limited budgets to diversify their investments while assuming a risk proportional to the amount invested. 

Direct real estate investments 

Direct real estate investment involves purchasing a property to build equity for reinvestment, generate passive income through rentals, or sell the property for a capital gain. It’s important to note that this type of investment typically requires a substantial initial capital, as it includes not only the purchase price of the property, but also ongoing costs associated with ownership. 

However, there are alternatives that allow investors with smaller budgets to get started. Let’s explore these options further to see how they can help diversify and grow your real estate portfolio. 

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1. Buying a property 

Buying a home is often the first step in an investor's real estate journey. However, it’s important to note that purchasing a home is primarily a personal real estate project. It doesn’t provide immediate income, as it doesn’t generate direct cash flow. Nonetheless, it’s an effective way to accumulate equity for a future real estate investment.  

What is the minimum amount to start? 

The minimum amount required to buy a home depends on several factors, such as the property's price, market conditions, and the specific requirements of your lender. 

Typically, to secure a mortgage, banks require a down payment of 5% to 20% of the property's purchase price. For instance, for a house valued at $300,000, a 5% down payment would be $15,000. Additional costs, like notary fees, inspection fees, and insurance, should also be considered. 

With the rising cost of living, this initial investment can represent a significant amount for many. Let’s explore an alternative option for buyers who want to enter the real estate market gradually. 

2. Rent-to-own 

The rent-to-own model allows a tenant to rent a property while having the option to purchase it at a future date, often after a predetermined period. This type of agreement provides a way to gradually acquire a property without needing to make a large initial down payment. 

Although this approach is still relatively rare in the rental real estate market, making opportunities harder to find, it can be an appealing solution for those who are not financially ready to make an immediate purchase but wish to buy a property in the coming years. 

What is the minimum amount to start? 

The minimum amount required for a rent-to-own agreement depends on several factors, such as the property price, the terms of the agreement between the seller and the buyer, and the deposit required by the landlord. 

Generally, rent-to-own contracts require an initial deposit ranging from 1% to 5% of the purchase price. For example, for a property valued at $300,000, this would be between $3,000 and $15,000. Depending on the terms of the agreement, this deposit may be credited toward the final purchase price if the buyer decides to exercise their option to purchase at the end of the rental period. 

Additionally, part of the monthly rent is often allocated toward the down payment for the future purchase of the property. This allows the tenant to gradually build up capital for the property's acquisition, reducing the amount needed to finance when purchasing. 

3. Buying a rental property 

Rental residential real estate is an attractive option for investors who want to generate immediate income through rental payments. In addition to producing passive cash flow, these properties can help cover part of the mortgage payments through the rent collected. Like any direct property purchase, it also allows for the accumulation of equity in the property over time. 

What is the minimum amount to start? 

The down payment for a rental property varies depending on the number of units. For a duplex, triplex, or fourplex, the minimum down payment is typically 20% of the purchase price. For example, for a property worth $400,000, the down payment would be $80,000. 

For properties with five units or more, the required down payment is reduced to 15%. So, for a five-unit property worth $400,000, the down payment would be $60,000. 

These amounts may seem substantial, especially for investors with a more modest budget. However, let's explore two options that could be particularly advantageous for some investors. 

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4. Owner-occupied property 

The concept of an owner-occupied property involves living in one of the units of the building while renting out the others. This allows you to generate passive income that helps pay a portion of the property’s mortgage. This investment model is particularly appealing for those who want to enter the real estate market without having to pay two mortgages. 

What is the minimum amount to start? 

The down payment required for an income property for owner-occupants varies depending on the number of units in the building. 

  • For a duplex: The minimum down payment is typically 5%. For a duplex worth $400,000, that would be $20,000. 

  • For a triplex or quadruplex: The minimum down payment is often 10%, which would be $40,000 for a $400,000 property. 

  • For a building with 5 units or more: The minimum down payment is usually 15%, which would be $60,000 for a $400,000 property. 

Although the initial investment to secure a mortgage is substantial, the income generated from rent can cover part of your mortgage, helping to reduce your monthly payments. Additionally, you benefit from housing in the same building, which can be a considerable advantage in a real estate market where housing costs are rising. 

5. Group rental investment 

Group rental investment involves pooling financial resources from multiple investors to purchase a property. This reduces the initial capital required from each individual, allowing the group to acquire higher-value properties. However, it is crucial to carefully plan this type of investment and establish a clear agreement among all investors regarding property management, profit distribution, and financial responsibilities to avoid potential conflicts. 

What is the minimum amount to start? 

The minimum amount required to start a group rental investment depends on the property's price, the number of investors involved, and the agreed-upon down payment. As previously mentioned, the minimum down payment for an income property ranges from 5% to 20% of the purchase price. 

For example, for a property worth $400,000 with a 20% down payment, the total capital required would be $80,000. If 6 investors participate in this project, each would need to contribute just under $15,000, making the investment more accessible to those with a smaller budget.  

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