Accredited Investor?? WHY!!

[Ryan Taylor]

Hoping someone can provide some logic to the SEC reasoning behind having to be "accredited investor" to invest in certain security offerings. Any other ways around this. Wanting to get into apartment syndication, and maybe you dont have to be accredited for this, but I have a couple of short term first trust deeds notes ready to ballon and want to redeploy my capitol. Any advice and guidance is greatly appreciated.

[Kevin Sobilo]

@Ryan Taylor, I am by no means an expert on the subject but I'll throw in my 2 cents.

I think the reason behind the SEC rules on accredited investors is that they don't want people who can't afford to lose money to invest in these kinds of investments. Also people who would not meet the accreditation criteria are often not financially sophisticated enough to evaluate these kinds of offerings.

The offerings often have a minimum amount that for people who have a lower net worth would mean a substantial part of their investment/savings would be in a single investment that they may not understand well enough. All their eggs in one basket proverbially speaking.

I don't think the net worth excluding primary residence equity of $1 million is that high. Many many people with real estate holdings or a healthy 401k will meet that. So, it isn't shutting everyone out.

From what I understand, one way around it is to know the people doing the syndication. If it is a family member or friend, I believe you can invest even though you don't meed the accreditation requirement.