Who Qualifies as an Accredited Investor and Why it Matters!
Some of the of the most tax advantaged and secure investment opportunities are limited to a group called Accredited Investors. Are you one of them?
What is an Accredited Investor?
An Accredited Investor is a person that can in invest in securities that are not registered with financial authorities such as the Securities and Exchange Commission (SEC).
The SEC believes Accredited Investors are sophisticated enough to take on the economic risks associated with unregistered securities that are do not have to meet the same disclosure as the SEC.
Who Qualifies as an Accredited Investor?
In order to qualify as an Accredited Investor you must meet the following criteria:
- Your earned income was greater than $200,000 ($300,000 if married) for the last two years, and reasonably expect to earn the same or more in the current year. OR;
- You have a net worth of over $1 million (single or married), excluding the value of your primary residence.
Why it Matters to Real Estate Investors...
Some of the of the most tax-advantaged and secure investment opportunities are limited to Accredited Investors. These opportunities are often called alternative investments and include:
- Real Estate
- Privately Held Companies
- Limited Partnerships
- Oil & Gas
- Private Equity
- Hedge Funds
In many cases, these investments aren't advertised to the general public, and due to legal issues, these opportunities are often never even shown non-accredited investors.
Some of the best passive real estate investments are either syndicated or are in the form a private equity fund that allows the investor to become a limited partner, receiving many of the benefits of direct real estate ownership.
Luckily there are some rules that allow non-accredited investors to invest in these types of investments. However, to find out about them you will need to have some sort of relationship with the management teams that put these deals together.
Because many of the best tax-advantaged and secure investments are only made available to Accredited Investors, it is important to understand what an Accredited Investor is and if you qualify.