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An accredited investor, in the context of a natural person, includes anyone who:
- earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR
- has a net worth over $1 million, either alone or together with a spouse or spousal equivalent(excluding the value of the person’s primary residence), OR
- is a financial professional who holds in good standing a Series 7, 65 or 82 license. Consult FINRA rules and applicable state rules.
There are other categories of accredited investors, including the following, which may be relevant to you:
- any trust, with total assetsin excess of $5 million, not formed specifically to purchase the subject securities, whose purchase is directed by a sophisticated person, OR
- certain entity with total investmentsin excess of $5 million, not formed to specifically purchase the subject securities, OR
- any entity in which all of the equity owners are accredited investors.
A sophisticated investor refers to one of the categories of an individual or an institution with vast market knowledge and experience in both financial and business matters in addition to significant wealth and income streams.
Due to their high net worth and knowledge, sophisticated investors are able to access certain investment opportunities that are not available to all investors.
Until 2013, if an individual investor wanted to passively invest in US Real Estate, the best way to do it was to invest in a REIT (Real Estate Investment Trust), at much lower yields and with no control over where your funds are deployed. You would typically pick a sector REIT and invest.
However, the JOBS Act in 2013 added new sections 506(b) and 506(c) to Rule 506, which opened up the opportunity for Sophisticated and Accredited investors to invest passively in commercial real estate crowdfunding deals through syndicated private offerings.
Yes, you can invest passively in real estate if you IRA, 401(k) plans are self-directed. If you’re an individual who knows and wants to manage how and where your retirement savings are deployed, the self-directed option could be ideal for you. This is a great option for individuals who would like to directly invest their savings in real estate and alternative assets, along with regular public securities.
If you’re a W2 employee, then you could rollover into a self-directed IRA. If you’re self-employed full-time or part-time (without any W2 employees working for you), then you should explore Solo 401K. Please check with your CPA or financial advisor before making any investment decisions.
By completing the form and joining our private investor network, you are only indicating an interest to invest in certain real estate opportunities, and are not commiting, obligated or legally bound to purchase any securities, nor are any securities yet being offered to you.