Limits on sophisticated / non-accredited investors syndications?
Hi BP community,
I recently invested in a real estate syndication as a passive non-accredited investor. Syndicators that I have spoken with say there are no limits to investing but I wanted to see what others had to say on this topic.
Here is a paragraph describing investment limits for CROWDSOURCING deals found on investopedia. Please note that my question is not for crowdsourcing; it's whether or not any similar limits apply to private deals.
Investment Limits for Non-Accredited Investors
While the updated Title III regulations allow non-accredited investors to participate in crowdfunded investments, it’s not a free-for-all. The SEC has opted to place restrictions on how much non-accredited investors can invest over a 12-month period. Your individual limit is based on your net worth and income. Accredited investors have no such restrictions.
If you make less than $100,000 per year or your net worth is below that amount, you can invest up to either the greater of $2,000 or the lesser of 5% of your income or net worth. If your annual income and your net worth exceed $100,000, you can invest up to 10% of your income or net worth, whichever is less, up to a total limit of $100,000.
The SEC imposes this limit for a reason. The purpose is to curtail the risk to non-accredited investors who may not be as knowledgeable about crowdfunding or investing in general. By limiting how much you can invest, the SEC is also limiting how much you could lose if a particular investment falls flat.
Thank you for reading and commenting. Any input is greatly appreciated!