Accredited vs Sophisticated investors

Accredited vs Sophisticated investors

Rental Property Investor · Eastvale, CA · Member since 2011 · 45 posts · 9 votes

If you are a Multifamily syndicator, I’d love your feedback on this:

What percentage of your deals require accredited investors only as opposed to being open for sophisticated investors?

Thanks,

Steve

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Brian BurkePro Member
Investor · Santa Rosa, CA · Member since 2012 · 2k+ posts · 7k+ votes
7y

We can accept up to 35 non-accredited investors in each offering, because we use the 506(b) exemption.  This exemption allows non-accredited investors but prohibits advertising.  If we were to use the 506(c) exemption we would be allowed to advertise but we would be prohibited from accepting non-accredited investors.  I've done one 506(c) out of like 30+ syndications.  I really don't need to advertise because investors come to me from word-of-mouth and referrals, so if I don't need it there's no reason to restrict who I can accept just so I can advertise.

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  • John FortesPro Member
    Multi-Family Syndicator · Abington, MA · Member since 2017 · 603 posts · 347 votes
    7y

    Not so much a percentage but a cap of 35 non-accredited investors in a 506(b) exemption. 

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