Issues with using Non-Accredited private investors

[Sean H.]

I am speaking with my attorney who is helping me setup the proper documentation for use with private investors. She is suggesting that I do not deal with non-accredited investors because if something should happen to them and they need their money back, they could sue me and claim that they should not have invested in the deal but did anyway because they didn't know any better. She feels that the disclosure documents that would be required for me to use a non-accredited investor would be too onerous for the type of financing I am seeking.

My strategy is to use private money for a one year term to acquire/rehab a rental property priced under $100k, then refinance to a conventional lender after that term.

I am kind of stuck here, as most of my potential private lenders have money sitting idle they want to invest, but do not meet the accredited investor threshold.

Has anyone had this sort of risk come up and how have you dealt with it? Is everyone who is using private money only using accredited investors?