Why?
Investing in multifamily real estate is an option that is available to anyone and if you are here it is because you are an investor or on the path to becoming a real estate investor. One function of the Securities and Exchange Commission is to protect investors from participating in riskier options. There are, however, pros and cons when looking at the benefits and protections for non accredited investors under the SEC rules and regulations. The SEC requires that some investment types qualify investors based on knowledge, experience and wealth to ensure that people with less experience and wealth are not harmed financially at a risk that will cause significant harm. The protections afforded through the SEC also come with a cost. A cost to non accredited investors means that certain investment types are not available as an option to grow and build wealth. However, doors open as wealth and knowledge increase so non accredited investors morph into accredited investors when their net worth climbs to over $1 million (not to include the value of a primary residence.)
What?
An accredited investor
- An investor whose earned income exceeds $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and anticipates the same or greater income in the upcoming year.
- Or has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence).
How?
There is no monitoring system at the SEC to obtain an investor classification. An accredited investor is self defined, however, companies will request documentation as evidence to support self classification, such as, providing bank statements, tax returns and/or documentation requested by the company with which they are partnering.