Do you know that you often won’t even have a chance to hear about the best real estate investment opportunities out there? Does that mean the general public sometimes might not be able to access great investment opportunities?
WHY? - Because you might not be an Accredited investor.
Don’t be surprised if sometimes you find out that you will not be allowed to invest into some investment opportunities. Most people never even run into a situation where they need to know what an Accredited investor is. You certainly might not think you would. But, if you consider investing into real estate, especially syndicated deals or crowdfunding deals, you likely will hear or be asked about the terms Accredited Investors and Non-Accredited Investors (Sophisticated Investors). No worries! KNN Capital Partners got you and we will make sure you get familiar with these terms by the end of this article. Here’s what you need to know to define what type of investor you are.
WHAT IS AN ACCREDITED INVESTOR?
An accredited investor is an individual who meets the guidelines and requirements of income and net worth based on the Securities and Exchange Commissions (SEC) regulations. This is so that the SEC can ensure proper protection for all investors. While the ordinary investor may have experience with investing in securities like stocks, bonds and mutual funds, the SEC sees products like syndication investments, hedge funds, private equity deals, etc. as entirely different “animals” in investing. So investors need to demonstrate they can understand the risks involved with these types of investments. However, one common misconception about accredited investors is that they must go through some formal training and testing process before they can be certified as accredited investors. No agency grants accredited investor status. There is no certification exam you must take or a document that solidifies you as an accredited investor. Instead, the company or the firm that you invest with will engage in their own screening process to verify an individual’s accredited investor status. To be an accredited investor, you must satisfy at least one of the following:
1. Have an annual income of $200,000, or $300,000 for joint income (married couple), for each of the last two years, with expectations of earning the same or higher income this year.
2. Have a net worth exceeding $1 million, not including your primary home.
3. Have specific professional certifications, designations, or other credentials issued by an accredited educational institution. The approved designations include individuals in good standing with the Series 7, Series 65, or Series 82 licenses. The SEC could also reevaluate and add additional certifications, titles, or credentials in the future.
So now that you understand what an Accredited Investor is, you’re probably wondering what makes you a Non-Accredited Investor (Sophisticated Investors), right?
WHAT IS A NON-ACCREDITED INVESTOR?
Well, it’s actually pretty simple, an individual who may not meet the accredited financial requirements but has enough knowledge and experience in business matters to evaluate the risks and merits of an investment. This individual also needs to have an established relationship with the team that they will work within the investment (NOW is the time for you to schedule a call HERE with us so we can understand more about your investment goals and become your trusted partner). The accredited investor vs non-accredited (sophisticated investor) is differentiated by satisfying those net worth and income requirements. But it’s important to note that this doesn’t mean they are less knowledgeable than accredited investors. Becoming an accredited investor is a long process that usually takes years to achieve, but with hard work, it can be done. There are other important factors that come into play such as your knowledge and experience in the investment field.
If you are a non-accredited (sophisticated investor), don’t worry. There are many investment opportunities even if you don’t have the net worth or income required. The important thing is to keep learning and expanding your knowledge in order to make the right investment decisions. The SEC classifies these types of investors as Non-Accredited in order to protect the average person from investing in something without fully knowing the risks associated with it. So for that reason, it’s very important to note that just because you’re non-accredited doesn’t mean you can’t jump into investments. There are plenty of options out there for everyone whether they are accredited investors or not. However, it’s always smart to learn as much as you can about how investments work before making any type of decision involving them.
How do you know which investments are for Accredited Investors and which ones are for Non-Accredited Investors (sophisticated investors)?
Real estate syndication investment opportunities are presented to passive investors, usually called “Offering”. The two most common types of offerings you will see are Rule 506 (b) or (c) of Regulation D which are two distinct exemptions from registration for companies when they offer investment opportunities.
1. Reg. D; 506 (b): The company may collect capital from an unlimited number of accredited investors and up to 35 non-accredited investors (sophisticated investors)
2. Reg. D; 506 (c): The investors in the offering are all accredited investors; and the company takes reasonable steps to verify that the investors are accredited investors.
CONCLUSION:
It is not really bad or good when it comes to being an Accredited Investor or a Non-Accredited Investor (sophisticated investor). Most people obviously would want to become an Accredited Investor who can meet the net worth and income required. But don’t ever forget that being well financially educated and having strong knowledge and experience are very important in the investment field. Every Accredited Investor needs to start from a Non-Accredited Investor (sophisticated investor). Surround yourself with like minded investors and invest with your trusted partners to achieve your goal becoming an Accredited Investor.
To learn more about multifamily investing or continue to get updated news about investment space, feel free to register your name and email on our website. For new investors, you can benefit from our articles regarding different topics across multifamily investing as well as market updates. For experienced investors, you can be updated on our current or next opportunities to invest. Contact us to know how to be a member in our “Apartment Passive Investors Club” for NO cost at all in order to join a community with like minded passive investors, to dive in more educational information about Multifamily syndication, and to receive deals (offerings) alerts as soon as they are available.
Let us be your guide and partners through multifamily investing.
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Do you know that you often won’t even have a chance to hear about the best real estate investment opportunities out there? Does that mean the general public sometimes might not be able to access great investment opportunities?
WHY? - Because you might not be an Accredited investor.
Don’t be surprised if sometimes you find out that you will not be allowed to invest into some investment opportunities. Most people never even run into a situation where they need to know what an Accredited investor is. You certainly might not think you would. But, if you consider investing into real estate, especially syndicated deals or crowdfunding deals, you likely will hear or be asked about the terms Accredited Investors and Non-Accredited Investors (Sophisticated Investors). No worries! KNN Capital Partners got you and we will make sure you get familiar with these terms by the end of this article. Here’s what you need to know to define what type of investor you are.
WHAT IS AN ACCREDITED INVESTOR?
An accredited investor is an individual who meets the guidelines and requirements of income and net worth based on the Securities and Exchange Commissions (SEC) regulations. This is so that the SEC can ensure proper protection for all investors. While the ordinary investor may have experience with investing in securities like stocks, bonds and mutual funds, the SEC sees products like syndication investments, hedge funds, private equity deals, etc. as entirely different “animals” in investing. So investors need to demonstrate they can understand the risks involved with these types of investments. However, one common misconception about accredited investors is that they must go through some formal training and testing process before they can be certified as accredited investors. No agency grants accredited investor status. There is no certification exam you must take or a document that solidifies you as an accredited investor. Instead, the company or the firm that you invest with will engage in their own screening process to verify an individual’s accredited investor status. To be an accredited investor, you must satisfy at least one of the following:
1. Have an annual income of $200,000, or $300,000 for joint income (married couple), for each of the last two years, with expectations of earning the same or higher income this year.
2. Have a net worth exceeding $1 million, not including your primary home.
3. Have specific professional certifications, designations, or other credentials issued by an accredited educational institution. The approved designations include individuals in good standing with the Series 7, Series 65, or Series 82 licenses. The SEC could also reevaluate and add additional certifications, titles, or credentials in the future.
So now that you understand what an Accredited Investor is, you’re probably wondering what makes you a Non-Accredited Investor (Sophisticated Investors), right?
WHAT IS A NON-ACCREDITED INVESTOR?
Well, it’s actually pretty simple, an individual who may not meet the accredited financial requirements but has enough knowledge and experience in business matters to evaluate the risks and merits of an investment. This individual also needs to have an established relationship with the team that they will work within the investment (NOW is the time for you to schedule a call HERE with us so we can understand more about your investment goals and become your trusted partner). The accredited investor vs non-accredited (sophisticated investor) is differentiated by satisfying those net worth and income requirements. But it’s important to note that this doesn’t mean they are less knowledgeable than accredited investors. Becoming an accredited investor is a long process that usually takes years to achieve, but with hard work, it can be done. There are other important factors that come into play such as your knowledge and experience in the investment field.
If you are a non-accredited (sophisticated investor), don’t worry. There are many investment opportunities even if you don’t have the net worth or income required. The important thing is to keep learning and expanding your knowledge in order to make the right investment decisions. The SEC classifies these types of investors as Non-Accredited in order to protect the average person from investing in something without fully knowing the risks associated with it. So for that reason, it’s very important to note that just because you’re non-accredited doesn’t mean you can’t jump into investments. There are plenty of options out there for everyone whether they are accredited investors or not. However, it’s always smart to learn as much as you can about how investments work before making any type of decision involving them.
How do you know which investments are for Accredited Investors and which ones are for Non-Accredited Investors (sophisticated investors)?
Real estate syndication investment opportunities are presented to passive investors, usually called “Offering”. The two most common types of offerings you will see are Rule 506 (b) or (c) of Regulation D which are two distinct exemptions from registration for companies when they offer investment opportunities.
1. Reg. D; 506 (b): The company may collect capital from an unlimited number of accredited investors and up to 35 non-accredited investors (sophisticated investors)
2. Reg. D; 506 (c): The investors in the offering are all accredited investors; and the company takes reasonable steps to verify that the investors are accredited investors.
CONCLUSION:
It is not really bad or good when it comes to being an Accredited Investor or a Non-Accredited Investor (sophisticated investor). Most people obviously would want to become an Accredited Investor who can meet the net worth and income required. But don’t ever forget that being well financially educated and having strong knowledge and experience are very important in the investment field. Every Accredited Investor needs to start from a Non-Accredited Investor (sophisticated investor). Surround yourself with like minded investors and invest with your trusted partners to achieve your goal becoming an Accredited Investor.
To learn more about multifamily investing or continue to get updated news about investment space, feel free to register your name and email on our website. For new investors, you can benefit from our articles regarding different topics across multifamily investing as well as market updates. For experienced investors, you can be updated on our current or next opportunities to invest. Contact us to know how to be a member in our “Apartment Passive Investors Club” for NO cost at all in order to join a community with like minded passive investors, to dive in more educational information about Multifamily syndication, and to receive deals (offerings) alerts as soon as they are available.
Let us be your guide and partners through multifamily investing.
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Understand Cash Flow In Multifamily Real Estate Investment
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We maximize investor returns by increasing net operating income throughout the holding period through a hands-on management style of heavy renovation and aggressive lease-up.
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