Accountant · Louisville, KY · Member since 2017 · 32 posts · 25 votes
I’m researching to see if it is possible to invest in multi-family property as a non-accredited investor. I’m aware of crowdfunding sites like Fundrise, but am interested in partnering in a local investment in Louisville, Kentucky if possible.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
7y
@Eric Shadowens
Like others have said network locally. You should be able to invest passively in a 506 b syndication even without being accredited. The catch is these can’t be advertised so you have to network to find them!
If you see yourself in long term and wanting your own deals definitely get in with an experienced partner. The experience just from seeing the process is worth it! I learned all on my own and wish I had partnered sooner. I would probably be retired by now. lol
Rental Property Investor · Louisville, KY · Member since 2018 · 66 posts · 39 votes
7y
@Eric Shadowens being an accredited investor is usually neesed when trying to invest passively in a syndication with people who you don't already know. If you are looking to meet people with similar interests check out some of the local meet ups. Are you looking to bring the money, the deal , the management, or a combination of them all?
@raphael collazo hosts an event the last Wednesday of the month in Louisville
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
7y
@Eric Shadowens
Like others have said network locally. You should be able to invest passively in a 506 b syndication even without being accredited. The catch is these can’t be advertised so you have to network to find them!
Thanks for the replies. I’d like to become an investor and am looking to partner, but am not accredited.
Search for an apartment association in your local market or within driving distance. They will hold meetings and the focus is right for your purpose. MeetUp and Google will be your friend for finding other gatherings.
If you are into the data, make a list of the apartment buildings in your target area. You can research the owner names. Notice any patterns for an entity that owns multiple units. In state vs out of state. What ever gives you a clue to who is making things happen locally even if they are not local. Speak with brokers who handle apartment buildings. You can use the current listings to find the brokers who are active. Ring them or drop in. What ever it takes to establish a relationship with them. Consider speaking with lawyers or title company staff to find out who the syndicators are. You do not need perfect info. Just a few leads to move you close to the people you wan to speak with.
Thanks for the replies. I’d like to become an investor and am looking to partner, but am not accredited.
One more thing. What do you do? Your career or speciality? Reach out to others like you and ask them if they are investing in RE. It never hurts to know who else might be a passive investor in your market. List what you do on your profile and make it easy for people to strike up a conversation. Attract the conversations you want to be having.
Thanks for the replies. I’d like to become an investor and am looking to partner, but am not accredited.
From a conservative investor: why not buy a small condo to "practice" on? I know soooo many people who get taken by "partnering".
Get a condo, get a licensed property manager, and "manage" your manager. This is how you do that: you get the property, and then every few months you call the manager, and you say, "Hi-This is Eric. How is everything?" Your manager is a broker licensed by your state with good search reviews and identifiable references. Not to mention it's hard to beat 10% cap as compared with 2% on many so-called multi-families today.
Accountant · Louisville, KY · Member since 2017 · 32 posts · 25 votes
7y
I appreciate the information so far. Is there generally a minimum syndication investment for a non-accredited investor? I'm sure it depends, but was curious if anyone was aware of a common minimum amount. I'm specifically speaking of the Louisville, KY or surrounding areas.
I appreciate the information so far. Is there generally a minimum syndication investment for a non-accredited investor? I'm sure it depends, but was curious if anyone was aware of a common minimum amount. I'm specifically speaking of the Louisville, KY or surrounding areas.
$5000 is one I've heard often. Thing I'd be checking on the most is the history of the place and references. Compared with public securities regulation (which itself is dubious) private real estate syndication is a free-for =all. That's why I prefer to be the sole owner.
Rental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
7y
@Eric Shadowens
50k is the most common minimum investment although it will occasionally be 25k and often 100k. Each investor represents a considerable amount of time and paperwork, hence 50k is a reasonable minimum.
Specialist · Scottsdale, AZ · Member since 2014 · 626 posts · 700 votes
7y
@Eric Shadowens as a non-accredited investor, you can still invest in a 506b offering as long as you follow the guidelines. Generally, the guidelines to qualify involve providing evidence of sophistication (sufficient knowledge and experience) and establishing a prior relationship. These requirements are intended to make sure the investment is an appropriate fit, but also to protect the parties by allowing enough time to do proper due diligence on each other.
Also, if you are a not an accredited investor, you should not invest in an offering that was open at the time you first met the sponsor. Again, this is intended to protect the parties from the pressure of jumping into an offering that is on the table right now.
Remember, the most important part of your experience as an investor will be the PEOPLE you are investing in, not just the DEAL you are investing in. If you are not an experienced accredited investor, take the time to understand the sponsor's strategy, their business philosophy, their track record, their investment model, and their approach to communicating/reporting to you as an investor, before you invest.
With all that said, there absolutely are opportunities for non accredited investors. They are just a little harder to find because 506b offerings do not allow for public solicitation. Most 506b sponsors start raising capital from friends and family and then build their investor base through networking and referrals.
You can find sponsors who offer 506b investments on platforms like BP, or through networking as mentioned above, but make sure to take the time to establish a relationship with them. If you do that step properly (as it is intended) you should be able to develop a good sense for who you are potentially going to be investing with. And don't be afraid to ask for prior investor references. Sometimes that can be the best way to vet a potential sponsor.
Flipper/Rehabber · Chandler, AZ · Member since 2017 · 74 posts · 67 votes
7y
@Eric Shadowens you've received some excellent counsel on passive investing in real estate. I'm a little unclear if you are looking for a place to put your money to work while you do something else or if you want to become an active real estate investor? If you are active in the property's management, you need not be accredited or even sophisticated. You just need to be willing and able.
Others have already said it. 'Sophisticated investor' and 506b investments are what you are looking for. You will need to establish the relationships, these sponsors are not allowed to solicit. So, start talking to people and learning about what they do and who they know.
On another note, Kentucky is great. Just closed on a 220 unit in Lexington, KY.
Flipper/Rehabber · Chandler, AZ · Member since 2017 · 74 posts · 67 votes
7y
@Javier D. the definition of an accredited investor is someone who earns a min. $200k annually for the past 2 years and expects to earn the same or more in future years.
It's a bit unclear as to whether you're interested to invest actively or passively in Louisville, KY area. In any case, here's a post that will help you determine which route is more suitable for you:
Good thread. My wife says I need to be more sophisticated. How does one become accredited?
I don't believe I can post links to other sites so I copied a definition and pasted below. It comes from the Investor.gov website:
What does it mean to be an accredited investor?
Under the federal securities laws, only persons who are accredited investors may participate in certain securities offerings. One reason these offerings are limited to accredited investors is to ensure that all participating investors are financially sophisticated and able to fend for themselves or sustain the risk of loss, thus rendering unnecessary the protections that come from a registered offering.
Unlike offerings registered with the SEC in which certain information is required to be disclosed, companies and private funds, such as a hedge fund or venture capital fund, engaging in these exempt offerings do not have to make prescribed disclosures to accredited investors. These offerings involve unique risks and you should be aware that you could lose your entire investment.
Who is an accredited investor?
An accredited investor, in the context of a natural person, includes anyone who:
earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR
has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence).
There are other categories of accredited investors, including the following, which may be relevant to you:
any trust, with total assets in excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, or
any entity in which all of the equity owners are accredited investors.
In this context, a sophisticated person means the person must have, or the company or private fund offering the securities reasonably believes that this person has, sufficient knowledge and experience in financial and business matters to evaluate the merits and risks of the prospective investment.
Accountant · Louisville, KY · Member since 2017 · 32 posts · 25 votes
7y
I appreciate all the responses. I'm definitely looking to get involved as a passive investor in Kentucky. I've researched a few associations that I can begin networking. I have worked in the tax world for close to 20 years and have recently begun to concentrate on real estate and construction.
If you're interested in meeting other investors, K.R.I.E.A is a great place to start. They have their meetings the last Thursday of every month and always invite great speakers to talk about real estate investing. Also, If you're looking for a meet up, we organize a real estate investor meet up the last Wednesday of every month at "The Manhattan Project" restaurant on Frankfort Ave. It's a laid back environment where we hang out, have a few drinks and talk about real estate investment. Hopefully I'll see you around either one of these events in the future!
Accountant · Greensboro, NC · Member since 2015 · 22 posts · 10 votes
7y
@Eric Shadowens fellow tax preparer here. One thing I do is make mental notes of clients who have real estate investments in their tax returns. Then I try to strike up a conversation about it during the offseason, they always love discussing real estate and it has opened doors for me through people I already knew but never considered in the past.