Passive Real Estate Investing in Quebec: 3 Options Compared

There are three main ways to invest in multifamily real estate in Quebec without becoming a full-time operator: buy a plex and hire a manager, lend privately, or invest in a private real estate fund. Each trades off control, taxes, liquidity and time differently.

We've been on the operating side since 2018, and today we manage $37.4M in assets for our investors. Here's how we explain the options when people ask us.

Option 1: Buy a plex yourself

Pros: full control, direct ownership, leverage through mortgage financing.

Cons: it's not passive. Leasing, maintenance, TAL files, renovations and refinancing are on you, or on a manager you supervise. Your capital is concentrated in one building.

Best for: investors who want to be operators and have the time.

Option 2: Private mortgage lending

Pros: predictable income, short terms, secured by real estate.

Cons: no share of the upside. Returns are interest income, which is fully taxable.

Best for: investors who want income and a defined term.

Option 3: A private real estate fund

Pros: professional sourcing, renovation and management. Diversification across several buildings. You share in the value created.

Cons: less liquidity, capital committed for the life of the fund, and you depend on the manager's discipline. These funds are generally offered only to eligible investors under prospectus exemptions.

Best for: investors who want multifamily exposure without the operating burden.

Interest vs capital gains: the tax difference

A 10% return in interest is not the same as a 10% capital gain. Interest is fully taxable. Only part of a capital gain is taxable. At the same marginal rate, an investor keeps noticeably more after tax from a capital gain. Limited partnership structures can also allow certain deductions to flow through to investors. Confirm with your accountant how this applies to you.

6 questions to ask any real estate fund manager

1. What's your track record, building by building?
2. How do you source deals: on-market or off-market?
3. Who manages the buildings and the renovations?
4. How is the fund structured, and how are fees and profits shared?
5. What reporting do investors receive, and how often?
6. Have previous investors reinvested with you?

For reference: of the 28 investments we've received since launch, 11 are reinvestments.

FAQ

Who can invest in a private real estate fund in Quebec?

Private funds are generally offered to eligible investors under prospectus exemptions, for example accredited investors. Each fund sets its own criteria. Check our investor eligibility page.

Is real estate passive income taxed like interest?

Not necessarily. It depends on the structure and on whether returns come from rental income, interest or capital gains. Your accountant can confirm your situation.

Is multifamily a resilient asset class?

Demand for rental housing in Greater Montreal stays strong, but returns depend on buying well and managing well. Asset selection matters more than the asset class.

Want the full picture? Download our free Passive Investment Guide or learn about our private funds.

This content is for information only and is not financial, tax or legal advice.