TMR BLOG: How to Become An “Accredited Real Estate Investor”?

Are you interested in becoming an “Accredited Real Estate Investor”?  An accredited real estate investor is one who is qualified to participate in apartment syndication, where a group of individuals or companies pool their money to purchase a large apartment complex. 

Apartment syndication is a popular investment option in the U.S. More than 120,000 investors were part of syndications in 2019 while the average real estate offering was worth $3 million.

Who is an accredited real estate investor?

You can only participate in an apartment syndicate if you are a ‘qualified investor.’ There are two types of ‘qualified investors.’ The first of these is an accredited investor who is a high-net-worth individual or company that can afford complex and higher-risk investments. An individual with more than a million dollars of net worth is deemed to be an accredited investor or earn a minimum of $200,000 in the last couple of years (or earning a joint income of $300,000).

How can you become an accredited real estate investor?

 In the U.S, the SEC (Securities and Exchange Commission) sets the criteria for qualified accredited investors.

The assets that are taken into account for the calculation of your net worth include your bank account, investments, car, and 401(k)/IRA accounts. Your home is not included in this calculation, although one exception is when there is an underwater mortgage or HELOC (home equity line of credit).

Apart from individuals, certain entities, as defined by SEC, can also acquire an accredited investor status, including brokerage firms, banks, trusts, RIA firms (Registered Investment Adviser), or retirement plans sponsored by employers.

How to determine if you are an accredited investor?

While the SEC or any other agency neither formally assesses nor gives a certificate of accreditation, the SEC requires that anyone who wants accredited investors to invest take some steps to verify this status.

If you feel you qualify as an accredited investor, you can ask for information by visiting a fund about potential investments. The securities issuer hands out a questionnaire that is designed to determine the qualification of a potential “accredited investor.” You may also have to attach information about your accounts and financial statements for assessment. Your credit report may also be evaluated to verify your qualification.

Individuals may also need to submit W-2 forms, tax returns, and documents that reflect wages. 

Can you invest in real estate if you are not accredited?

Most real estate crowdfunding opportunities are only open to qualified accredited investors.

However, there are some real estate investment platforms that offer opportunities for non-accredited investors. These include CrowdStreetFundrise, and Roofstock. If you do not qualify as an accredited investor, you can also invest in various types of bonds, equities, and real estate.The Securities and Exchange Commission in August 2020 amended the definition of an “accredited investor” by adding new categories. Natural persons with certain professional designations, certifications, or credentials can also be considered as accredited investors. Additionally, limited liability companies that have $5 million worth of assets can also be accredited investors, while ‘spousal equivalents’ can also pool in money to qualify as accredited investors.

– The Multifamily Team

Hi, my name is Michael Avent. I founded The Multifamily Review in 2020. I’m a Commercial Agent at Northcap Multifamily located in Las Vegas, Nevada. My vision for The Multifamily Review is to be the most trusted resource for all Multifamily Investors and Industry Professionals. We strive to offer the best and most up to date content to our readers and are always open for suggestions. Make sure you sign up to join our newsletter to stay up to date on our latest blog, ebook, and more exclusive content that’s coming your way! The Multifamily Review team and I look forward to building a deeper relationship with you!

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