Accredited Investor Definition
At first I wasn’t going to discuss this portion but I feel building up to and becoming and accredited investor is a huge milestone and opens up many avenues in investing. So below is what is required to become and accredited investor.
To be an accredited investor, you must have $200,000 in annual income ($300,000 for joint investors) for the last two years with the expectation that you’ll earn the same or more this year. You can also be considered an accredited investor if you have a net worth over $1,000,000, individually or jointly, excluding their primary residence.
The requirement exists because the SEC wants to make sure that investors in unregistered securities can afford to lose money and not be financially ruined. These deals are often called private placements and they don’t need to register with the SEC, so they don’t provide as much information as you’d expect from, say, a publicly traded company. The accredited investor requirement assumes that someone who is accredited can do due diligence on their own and afford the financial loss if the deal doesn’t work out.
For some investors, that bar might be too high. Or perhaps it’s the timing of it. You need that level of income for three years (two in the past plus the current year), perhaps that’s not possible. Either way, if you want to invest in real estate crowdfunded sites and you aren’t an accredited investor, Fundrise, RealtyMogul and publicly traded REITs are a great place to start.