Is accredited investor a requirement for multi family unit purchase for investment?

Question

It looks like only accredited investor can invest in multi family investing. Is that strictly enforced? What if a married individual has income of $200k+ but the spouse is not in workforce, so that is the total income. i.e below the $300k limit for married filing jointly. Can they still get an accredited investor rating? Assume the total net worth is not $1Million

What's the cost in the process to get the accreditation?

Bradley Buxton · Answer

@Sharad Bagri

In my market in Northern Nevada Reno market and in my experience working with clients none of them are accredited investors. I don't think you need to be an accredited investor to buy a multifamily property even if it's over 5 units.  CA might be different and where you generally need accreditation is when you are using other people's money and promising returns.

Erik Estrada · Answer

You should be able to finance a 4-6 Unit property without being an accredited investor. This is not a requirement for most DSCR and Commercial lenders

Alecia Loveless · Answer

@Sharad Bagri There should be no requirement to be accredited to purchase a multi as long as you have the requirements met to get the loan.

Josh C. · Answer

You can buy anything you want without being accredited. Thats only if you wanted to invest your money into someone’s deal. An example of you putting up 100k into a 200 unit building in Philadelphia with another 30 investors.

I wasn’t accredited when I bought my first multi, an 8 unit. Just make sure the numbers make sense and you only focus on the number of doors.

Tim Ryan · Answer

For further clarity. The point of the government requiring some larger investments to only take "accredited investors" is the paperwork you agree to specifically says you could lose all of your money. They want only people who can weather that type of investment in the deal. Many investments in multifamily also will allow up to 35 "Sophisticated Investors". With that you don't need to show the net worth over $1m or $200k income as a single and $300k married. But you need to show sophistication in business and in investments.

They don't want syndicators taking grandma's money she got from her husbands life insurance and it's all the money she has, and she never worked outside the home. That would be neither sophisticated or accredited.

In your case if you are buying a property on your own, no one asks if you are accredited. However the lender is making sure your can afford the purchase.

Paul Azad · Answer

You only need to be accredited to buy into a Reg D 506C limited partner position in a syndication, you don't have to be accredited to buy into a Reg D 506B limited partner position in a syndication if they have open, one of the 35 spots allowed for non-accredited investors per 506B syndication. For example you buy into a syndication with 100 investors in a 506B, 65 or more must accredited. I don't think the sub-type of asset class matters, ie multi-family/industrial/data center/SFR/MHParks etc. I think i remember reading that you can also demonstrate accreditation status by working in some capacity for the syndicator, or also by working "meaningfully" in real estate anywhere in some capacity, and these don't have a dollar value ie. the 300k joint filing or 1Meg net worth threshold.

but the amount of due diligence required to invest in a private syndication is/should be a lot, which always are more opaque than a public RE investment, like REITs, is something you may want to avoid until you have been involved in RE directly for some time

consider mortgageREITs, eg. AGNC paying me 14% dividend and should rise >10% over next year as long bond yields fall due to falling inflation like today, or rate cuts, or recession. or equityREITs, like BSRTF, owns multi-family in Texas/Arkansas/Oklahoma, in good long term growth areas

good luck :)

Sharad Bagri · Answer

Like 4-6 units. How does it impact? Trying to keep the total cost below $1.5M.

Erik Estrada · Answer

How many Units are you looking at?

Is accredited investor a requirement for multi family unit purchase for investment?

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