If you are wondering whether or not you qualify as an accredited investor, you are not alone. The term can be confusing and it is not always clear who qualifies.

In short, an accredited investor is someone who meets certain financial criteria. Here is a breakdown:

-the individual must have earned income that exceeded $200,000 (or $300K together with a spouse) in each of the prior two years and reasonably expects this trend to continue into next year.

or

- they have a net worth over $1 million, either alone or together with a spouse. This cannot include the value of the person’s primary residence.

Additionally, entities such as partnerships, banks, corporations, non-profits and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:

 -any trust, with total assets in excess of $5 million, not formed to specifically 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.

Why does any of this matter? When it comes to structuring the deal with the SEC, there are certain regulations that monitor what types of investors are participating in the deal. More on that in another blog post…

If you are thinking of investing, it is always best to consult with your CPA before making any decisions. Get in touch with us if you would like assistance in selecting a CPA.

Do you already feel ready to invest? fill out our questionnaire, and let’s get going on your journey in multifamily real estate investing!

Aloha,