Editor's note: This story has been updated to include details about Kentucky Derby winner California Chrome.

When racehorse California Chrome thundered past 19 rivals on his way to the finish line at the 2014 Kentucky Derby in May, he did more than earn a million dollars for his owners. He also turned years of entrenched wisdom on its head.

The 3-year-old California-bred horse showed that winning does not depend on DNA or regal spending — a good lesson for anyone who is interested in buying their own racehorse.

The winner of the 140th Derby, a chestnut colt, has humble beginnings. His sire is Lucky Pulpit — a 10-year-old horse with just 3 wins from 22 starts — while his mother is an undersized and underperforming mare named Love the Chase. His working-class owners, Steve Coburn and Perry Martin, a two-man syndicate facetiously named Dumb-Ass Partners, paid a measly $2,000 stud fee to breed his two parents. Coburn and Martin are now richer by almost $1.5m.

Despite his modest pedigree, California Chrome proved yet another point: racehorse owners don’t have to invest big to win big.

No one knows this better than New Jersey native Rich Schweitzer. At first, $20,000 worth of investment in three racehorses returned nothing but losses and despair for the aircraft parts broker. But things changed dramatically in 2010 when Schweitzer received a small ownership interest in Animal Kingdom, a chestnut colt bred by Team Valor, a Lawrenceburg, Kentucky-based stable.

The following year, the horse won the 137th running of the Kentucky Derby, one of the most prestigious horseracing events in the US with a total purse of $2.1m. Then he won the $10m Dubai World Cup, the world’s richest race, in 2013. These wins “covered the costs of about a dozen horses,” said Schweitzer, who now part-owns four broodmares (retired female racehorses) that will be bred with Animal Kingdom.

Horse racing appears daunting for those outside of the glamorous and fiercely competitive world. Yet, it’s not financially impossible. There are several things prospective racehorse buyers can do to participate in the exciting sport without breaking the bank. While few owners will ever have the success of Schweitzer, one thing is guaranteed — even a losing racehorse can make a winning pet.

What to look for

A racing thoroughbred must possess a combination of talent, stride, temperament and pedigree, in that order, said Barry Irwin, chief executive officer of Team Valor. It’s critical for the uninitiated to seek professional input from seasoned horse owners, trainers and advisors, said Edmonton, Canada-based Cory Wagner, co-founder and chief executive officer of SportingCharts.com, a sports analytics site.

“If you knew nothing about the stock market, would you go throw a pile of money into a bunch of stocks?” said Wagner who also co-founded popular investor education site Investopedia in 1999. “It's no different in horse racing.”

 A horse must be both powerful and light on its feet. “Look for rhythm,” said Irwin. “Horses that don’t move correctly waste motion, which wastes time.” The correctness of a horse’s bone structure, musculature and body proportions is another key consideration.

“Make sure to also get a veterinarian to examine any horse you buy,” said Wagner, himself an owner of 14 horses. ”A good vet or trainer will know if a horse just isn't put together to be a racing prospect.” A typical vet exam of a prospective horse might cost from $200 to $500.

Where to shop

You can purchase racehorses privately with the help of a trainer or a bloodstock agent. A bloodstock agent is qualified to evaluate horses based upon pedigree and physical condition for the purpose of buying and selling. Horses can also be purchased at auctions such as the Keeneland September Yearling Sale in Lexington, Kentucky in the United States and Tattersalls Autumn Horses in Training Sale in Newmarket, Suffolk in the United Kingdom. 

Horses sold at training sales have had some racetrack experience so buyers aren’t making a blind bet on their racing potential, said Jason Singh, marketing manager of Tattersalls Ltd, a Newmarket, UK-based racing stable.

 “You know roughly what you’re getting and can have a horse running within a week or two,” he said.  “Also, buying at auction means you are getting market value and are protected by the conditions of sale issued by the company.”

You could also “claim” a horse at a claiming race where participating horses have a price tag. Prospective buyers submit a claim before the race starts. Once the race is over, the horse is yours. If a claim is submitted by more than one person for the same horse, a simple draw after the race picks the person who gets the horse.

Although the mother of California Chrome was bought at a claiming race for just $8,000, the method of equine acquisition is not for everyone. For one, said Wagner, you can’t have a veterinarian examine the horse. If the horse breaks a bone or pulls a tendon of muscle in the race, it's your problem, he added. Expect to pay between $5,000 and $100,000 for claiming.

When to buy

Horses can be bought at all different stages of their lifecycle including a foal (a baby horse), a yearling (one-year old untrained horse) and a 2-year-old in training.

Irwin prefers lightly raced horses but warns “horses in many instances have been pushed too hard and are compromised” early in their lives, even if they’ve only raced in a couple of races, in the case of 2-year-olds, or about 5 times, if 3 years of age.

If you think you might want to “flip” a horse like you would an underpriced house, be warned: the practice, called “pinhooking,” is a risky undertaking. You usually must retain a horse six months to a year and “horses change dramatically when they’re young,” cautioned Irwin.

How much it costs

Buying your own racehorse can set you back anywhere from $10,000 to $100,000, said Irwin.

By contrast, syndicates such as Team Valor International (US), Horse Racing Share  in Australia and Owners for Owners in the UK can offer a stake in a racehorse for as little as a few hundred dollars. Expenses are shared on a pro-rata basis. So is prize money.

 “The evolution of syndicates has allowed everyday people to be directly involved,” said Colin Madden, managing director of Australian financial firm RMBL Investments. As the part-owner of legendary Australian racehorse, Black Caviar, Madden also enjoys all the perks and privileges of the winner’s circle.

Not only has Madden made a small fortune — Black Caviar retired last year with winnings of around $8m, undefeated in all 25 outings — he and his wife “got to travel the world and ended up meeting Britain’s Queen” and “were invited to attend a dinner at Windsor Castle” because of their ownership interest in the winning horse.

The cost of a sprinter, irrespective of the place of purchase or the type of ownership, depends on a variety of factors including pedigree, past performance, supply and demand and economic conditions.

At an auction, prices could start at as low as $1,000, but could go up to $1m. This doesn’t include the 5% to 10% commission that agents charge for appraising and researching the horse.

Ongoing training and maintenance costs can add up. Trainers charge by the day, usually about $55, but twice as much if training on high-end racetracks. Buyers are also responsible for monthly veterinary bills — typically between $500 and $1,000 in North America and about A$200 and A$400 ($186 to $372) in Australia. There are grooming and transportation expenses, and the cost of a farrier (hoof care specialist).

Racehorses also eat like, well, a horse. Typically they will consume 2% to 2.5% of their body weight in hay daily, according to the Ontario Ministry of Agriculture, Food and Rural Affairs. The average thoroughbred racehorse weighs about 1,000 lb and consumes 22lb to 24lb of hay per day. Add to that a daily diet of about 10lb of whole grain, special feeds and supplements.

Overall, a monthly tab of $2,500 to $3,500 is fairly standard, said Wagner. All expenses are split according to the ownership ratios.

When buying a racehorse, keep your emotions on a tight leash. Experts say spend only what you can afford to kiss goodbye. Horse racing is a betting man’s game, after all. Committing your life’s savings in the hope of a finish-line windfall is “a fool’s journey,” said Irwin.

Consider the occasional profit a bonus. “Only by adopting this attitude will one have a ghost of a chance of coming out on the right side of the financial ledger,” said Irwin.

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