• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer navigation
Crei Partners Real Estate Investors logo

CREI Partners

Real Estate Investments

  • Strategy
  • Team
  • Investor E-Book
  • Education
    • Frequently Asked Questions
    • Podcast
    • Blog
  • Investor Login
  • Invest with Us

Currently browsing
Multi-Family Investing Uncovered

What is an accredited investor?

What is an Accredited Investor?

November 14, 2022 by Wayne Courreges III Leave a Comment

An accredited investor is an individual or business entity that is assumed to have the expertise and financial security to engage with securities that are unregistered with the financial authorities. The criteria was set to ensure that those participating in higher-risk securities trading can understand and weather the outcome of the deal, should it not provide the returns that were hoped for. In a Regulation D, Rule 506(c) multifamily real estate syndication investment, the offering is unregistered with the SEC, therefore, all participants must be accredited investors.  This also allows the sponsor to advertise the investment opportunity.

Who are Accredited Investors?

The SEC sets out several criteria that must be met to achieve accredited investor status. The primary qualification is earning $200,000 per year ($300,000 with a spouse) in each of the last two years. There must also be the expectation that the same will continue in the present year. Alternatively, the person or couple must have a net worth of over $1 million, excluding the value of the primary residence. Entities may also qualify as accredited investors, generally with greater than $5 million in assets among other requirements.

As of August 2020, the SEC expanded the definitions to allow spousal equivalents to be included when calculating income, assets, and debt, such as a live-in significant other. They also updated the rules to include “knowledgeable employees” of private funds in addition to financial professionals who hold Series 7, Series 65, and Series 82 financial security licenses.

Are you an Accredited Investor?

As there is no centralized accreditation tracking agency. It is the responsibility of the seller of unregistered securities to verify their clients are accredited investors before proceeding. If you (and your spouse or equivalent) qualify based on income criteria, tax forms or income verification paperwork may be requested to certify your status.  Typically, the sponsor will ask this from either your CPA, attorney, or using a service like verifyinvestor.com.

When calculating based on net worth rules, be sure not to include the value of your primary residence. Net worth can be calculated by taking the total value of assets, less the value of all debt. The value of retirement accounts can be included as assets. Nerd Wallet has an easy-to-use Net Worth Calculator that may help streamline your math. When verifying your status based on net worth qualifications, there may be a simple questionnaire. Alternatively, they may use financial statements, balance sheets, letters from CPAs, and other forms.

Conclusion

All regulatory authorities of markets and securities are tasked with promoting investment and safeguarding investors. The Securities Act of 1933 is known as the “truth in securities” law. This legislation created both accredited investors and tightened safeguards surrounding communications regarding investments. Non-accredited “sophisticated” investors may still invest in multi-family syndications through a 506(b) offering. Of course, they can also invest in any publicly traded stock, bond, mutual fund, or real estate investment trust (REIT).

Once accredited investor status is achieved, the investor is considered savvy enough to understand all of the factors at play in an investment opportunity. Therefore, they have more freedom to participate in investments unlisted with the SEC or financial authorities.

 

Additional Resources

Great News for Future Accredited Investors

CREI Partners Webinar: Legal Must Knows for Passively Investing in Real Estate

Risk vs Reward: 4 Factors to consider when deciding between Stock Market vs Real Estate Investing

About Wayne Courreges III

Based out of Austin, TX, Wayne leads the investment life cycle and investor relations for CREI Partners as the Lead Sponsor and General Partner. CREI Partners is a privately held investment company focused on acquiring multi-family value add opportunities throughout the Austin, San Antonio, and Houston region. Contact Wayne at 512-710-2500 or wayne@creipartners.com for more information on future investment opportunities.

Reader Interactions

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

« Previous Post
Next Post »

Primary Sidebar

Search

Recent Blog Posts

  • Teaching Kids About Investing
  • Unlock your Ideal Work-Life Balance by Passively Investing in Real Estate
  • 4 Reasons Engineers Should Invest in Real Estate Syndications
  • REITs vs Multi-Family Syndications: What are the biggest differences?
  • Active vs. Passive Real Estate Investing

Subscribe to our Monthly Newsletter to receive our free Passive Investor E-Book!

* indicates required
Crei Partners Real Estate Investors logo

7500 Rialto Blvd., Bldg. 1, Ste. 250, Austin, TX 78735 •
512-710-2500
invest@creipartners.com


© 2023 CREI PARTNERS. All Rights Reserved.

The information on this website does not constitute an offer to sell securities or a solicitation of an offer to buy securities. Further, none of the information contained on this website is a recommendation to invest in any securities. By using this website, you accept our Terms of Service and Privacy Policy. Past performance is no guarantee of future results. Any historical returns, expected returns or probability projections may not reflect actual future performance. All investments involve risk and may result in loss

  • Strategy
  • Team
  • Investor E-Book
  • FAQs
  • Podcasts
  • Blog
  • Investor Login
  • Invest with Us

"*" indicates required fields

Subscribe to our Monthly Newsletter to receive the Top 5 Must Know Tips For Passively Investing in Multi-Family Real Estate E-Book!

A must read for anyone looking to passively invest in multi-family real estate!

Plus stay updated with multi-family insights, blogs, and more!

This field is for validation purposes and should be left unchanged.