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#accredited investor real estate

An accredited investor real estate can benefits the most from real estate investments.

Invest as an accredited real estate investor, and you can reinforce the growth of your wealth. These benefits are possible because you can participate in private real estate deals formerly reserved for financial tycoons and institutions only.
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Who is qualified as an accredited investor?

Accredited Investors must meet one of these guidelines: Net worth exceeding $1 Million (excluding primary residence), individual annual income over $200,000, or Joint annual income over $300,000.

Why are most commercial real estate deals exclusively available to an accredited real estate investor?

After the Securities Act of 1933 passed, all financial securities offerings had to be SEC-registered through a lengthy and time-consuming process. This regulation presented a problem for real estate investment companies because they often recruit investors under tight deadlines for commercial real estate deals that may last as little as a few years. Consequently, the fast-moving commercial real estate deals were incompatible with SEC's securities regulations.

These circumstances gave birth to the practice of restricting commercial real estate investments to accredited real estate investors. Since the SEC determined that extremely wealthy and sophisticated investors didn’t need protection from the SEC, the agency added an amendment to the Securities Act of 1933, allowing commercial real estate deals to operate unregistered under three conditions:

  1. The principals must conduct the deal privately.
  2. Only accredited real estate investors can buy in. 
  3. The investors must meet the SEC's qualifications for an accredited investor.

What risks are involved in real estate investing for accredited investors?

Most risks associated with investing in accredited investor real estate are the same as investing in other asset classes. They include liquidity risks, market risks, and the risks of not finding the right buyer for the property at the right time. In addition, there are tenant-related risks of failing to meet tenant occupancy objectives and tenant rent delinquency.

Although an accredited investor real estate investment generally gets favorable financing, there is also the risk of not securing financing or refinancing for the property. Finally, in your due diligence, you should thoroughly investigate the developer because there is the risk of mismanagement and sub-standard maintenance.

What are the rewards of being a real estate-accredited investor?

As a real estate accredited investor, you can access private real estate offerings unavailable to other investors. And lucrative accredited investor real estate deals may allow you to expand your wealth in a shorter time than registered investments. But you must be willing to assume the risks. In addition, you may get more favorable loan terms and more diversity in your portfolio.

What type of real estate accredited investor opportunities are available?

If you meet the SEC definition of an accredited real estate investor (see accredited investor page), you will have many real estate accredited investor real estate investment opportunities through several investment vehicles and online investment platforms. The three most popular types are as follows.

  • Private equity real estate

A private equity real estate firm offers you the opportunity to purchase, finance, and own a property (or properties) through a pooled private investment fund. However, it invests in professionally managed funds like REITs; private equity real estate companies do not offer accredited investors publicly traded shares in the deals.

Instead of using the REIT approach of primarily offering revenue from rental income, private equity real estate provides real estate accredited investors a share in the earnings and profits from speculative property deals involving undeveloped land and other types of real estate investing for accredited investors.

  • Real estate syndication

Real estate syndication involves a group of accredited investors pooling their capital and resources to purchase an office building, apartment complex, strip mall, or other accredited investors real estate too large for them to own individually. A syndicator typically organizes the real estate syndication, searches for and reserves the property, drafts the contracts, and recruits the investors.

  • Real estate crowdfunding

Real estate equity crowdfunding platforms feature websites and apps where you can make deposits to pool your money with other accredited investors in exchange for exclusive investment opportunities proportionate to your investment. These platforms offer a variety of new offerings in multifamily housing, commercial real estate, build-to-rent, and others. Although many crowdfunding sites cater to real estate accredited investors, some crowdfunding platforms of real estate investing are for non accredited investors.

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