What Exactly is An Accredited Investor?

[Justin Goodin]

Even if you’re a total newbie, it’s important to know the difference between a sophisticated investor and an accredited investor and if you’re one of them.

Neither of these titles requires an application or an approval process. You can find out whether you’re an accredited investor based on a few simple criteria.

To be an accredited investor, you must:

1. Have had an annual income of $200,000 (or $300,000 for joint income) for the past two years, and expect to earn the same or higher income this year.

OR

2. Have a of over $1 million, not counting your primary home.

The main perk of being an accredited investor is access to more deals. Why is this? Well, in the eyes of the SEC, being an accredited investor means that you are savvy enough to have figured out how to accumulate some wealth. Thus, more investment opportunities are open to you, since you are in a better position to take on risk.

If you’re a non-accredited investor who happens to love real estate, there are still plenty of investment opportunities available, including passive investments through real estate syndications. However, since SEC regulations do not allow investments for non-accredited investors to be publicly advertised, you may just have to search harder to find them.