What is an Accredited Investor?

What is an accredited investor? ūüé• Quick Video

Pondering how a person can be called an Accredited Investor? Do you need to be one to get access to private investment opportunites?

What qualifies as an accredited investor?

An accredited investor is an individual who has the institutional knowledge, experience, net worth, and/or financial sophistication to evaluate an investment opportunity.

Defined by the United States Securities & Exchange Commission as someone who makes a minimum of $200,000 ($300,000 if filing jointly) or has a net worth of $1 million dollars excluding personal residence – although one could easily do a cash out refinance or HELOC to get the equity out of the primary residence in order to put you over the $1M threshold if needed.


Importance of being an Accredited investor

The significance of being an accredited investor is that you can invest in things that those with less money, cannot which are mainly deals such as Reg D 506C offerings which are mass marketed and therefore can only allow Accredited investors.


Alternatives to having accredited investor status

If you are not Accredited don’t worry! Most deals out there are done through private networks and not mass marketed – these Reg D 506B offerings are accessible to “sophisticated investors” which has a much more nebulous definition but essentially says you know what you are doing even if you don’t have that much money.

In Reg D 506B offerings which require you to have a pre-existing relationship with the sponsor, you have the ability to invest if you can qualify as “a sophisticated person investor” which has a more ambiguous definition but essentially says you know what you are doing even if you don’t have that much money.¬†

These laws were put in place long ago to “protect” the average person (non-Accredited investors) from predatory activity. The irony of this all is that there is no protection for the average Joe, or pension funds for that matter, against investing in a wildly bloated stock market at record valuations and being mislead by a commission based financial planner. Every major trader out there knows we are in a bubble but there is no protection for individuals dumping money into their retirement accounts to buy mutual funds. It’s an archaic system which makes little sense and I have always felt that it was the little guy (non-Accredited investor) that need access to good private alternative assets the most!

Certainly, there has been some recognition of this fact. The 2012 JOBS act made it easier for Main Street America to participate in “alternative” investments via crowdfunding and made it easier for sponsors to advertise previously unknown opportunities. However, we have a long way to go because it is not practical for a syndicator to raise private capital with current crowdfunding laws because the maximum that can be pooled together is very small.

I am not a fan of crowdfunding websites. When I invest personally, I need to know the lead syndicator personally. None of this “we met at a local event and he pitched me his deal”. If a guy does not have a list of solid investors they must lack the track record. Also I did a podcast with Amy Wan a syndication attorney talking a lot about this topic.


How do I get qualified as an Accredited investor?

For Reg D 506C offerings where third party verification is required… the steps involved with qualifying¬†include a bank statement from a financial institution that has been approved as a bank, a mortgage (with a qualified purchaser), joint net worth or income of more than $200,000 to qualify as an accredited investor, or a non-bank financial information, including the net worth of $1M not including equity in your primary residence. (Because your home is not considered a good investment in our community)


Types of investments an accredited investor can make

Now that you’re an accredited investor, you started asking yourself “what type of investments should you get into to¬†increase your net worth by getting away from retail investments?”

The golden rule is to work with investment firms that have a proven track record. 


Potential SEC changes

Some rule changes rumor to pushing the threshold for Accredited investor status to $5 million or more of net worth. Or creating a new level of investors such as Accredited investor plus.

Go ahead and start your journey towards becoming an accredited investor.

SimplePassiveCashflow.com is for working professionals who are looking for diversification and better returns outside of traditional investments such as mutual funds and stocks.

The Hui Deal Pipeline Club is a free investor club where I filter investments and underwrite the numbers and partners myself. And put my money and reputation on the line. Unlike other investor lists and groups, my investors have personal access to me and know that I personally have skin in the game investing alongside with my investors. 

*We even accept non-Accredited investors and have turnkey rental opportunities. But only Accredited investors get free books (input address below).

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I started this investor group because I wanted to create a community and personally see each of you get to your goals financially. I don't see myself as a guru but a facilitator of this great Co-op group of investors to crowdfund due-diligence and bring opportunities to the group Now that I am a full time investor I have the ability to travel for due-dilligence, join masterminds like the Collective Genius, and have calls with all the members in my investor club.

There are other investment companies out there that will train their investors down to 5-12% IRRs with a lot of risk - I won't work with them. At the same time I value working with inexperienced syndications who have no experience even doing small residential single family rentals of their own or started with a small apartment to learn operations and proper analysis. I don't "do deals to do deals" to pick up acquisition fees.

By investing alongside with you folks I am in the GP side and looking to expand my track record and gain experience the right way.

Please know that I take great respect in running my syndication business as I am well aware that each deal I put out there is putting my brand reputation on the line. I intend to be here for a long time and hope that you will keep coming back and bring your friends.

Hui (hu ee) - Definition: to join; meet; unite; form a club; partnership; union

Some investments (syndications) that I am involved with require you to be an accredited investor. Others are simple solo investments or small JV projects. SEC definition link For more information on Accredited Investors You agree to keep these deal confidential and to not circumvent. This does not constitute an endorsement of these deals nor guarantee the investment... think for yourself! To jump to the front of the line, ask about mentoring! Join the Passive Investor Accelerator & Mastermind! Please submit the private (Privacy Policy - I take your security seriously) form below and schedule a call with me to understand your investing goals. Schedule here

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