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If you’re interested in real estate syndications, you may have encountered a major roadblock — limited access to some investment opportunities. Most real estate syndications are open only to accredited investors rather than to the general public.

Why are some value-add real estate deals open only to accredited real estate investors? Sterling Rhino Capital explains the why and what it takes to be an accredited investor in the United States.

Accredited Investors Understand Investment Risks

Accredited real estate investors are eligible for more investment opportunities since they are deemed capable of taking on increased risks. These investors have exclusive access to real estate crowdfunding opportunities, venture capital funds, and private-placement deals. 

In the United States, the Securities and Exchange Commission determines the criteria for accredited investors, but it is up to the investment vehicle to determine if you will qualify as an accredited investor. 

 

 

You Need to Prove Your Financial Capacity

As a rule, you need to meet at least one of these requirements to qualify as an accredited investor.  

1. Your net worth, excluding your primary home, should be at least $1 million.
2. Your gross income for each of the last two years should be at least $200,000 per year or $300,000 jointly with your spouse. You should also have the intention to meet or exceed this gross income for the year.

 

 

Opportunities for Accredited Investors Are Publicly Advertised

Many investors feel left out when they learn that some deals are only available to accredited investors. There are other opportunities for non-accredited investors, but these deals can’t be publicly advertised. However, non-accredited investors can find accredited partners to access exclusive real estate deals.

 

 

 

Ability to Absorb Higher Losses

Accredited investors have access to invest and buy unregistered securities because they have a financial advantage that allows them to absorb more losses. The returns for deals offered to accredited investors tend to be higher since the risks are also higher for unregistered securities.

 

 

 

Accredited real estate investors appear to have the top picks when it comes to value add real estate, but there are many investment opportunities even if you’re non-accredited. You can invest in other areas or network with people to find value-add real estate opportunities that will accept non-accredited capital.

Partner with Sterling Rhino Capital and learn of alternative ways to accumulate wealth through real estate where it’s not necessary to be an accredited investor.

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