Loan affect on accredited investor
Hi BP,
I'm unsure of the affect a loan would have on an individual's net worth. One way to be considered an accredited investor is a net worth exceeding $1M, excluding primary residence. So, let's say an individual has a net worth of $1,000,000.01. That person then purchases a $200k investment property putting 25% down and creating no equity. Let's assume the market agrees that the value of the home is equal to the purchase price, $200k. In this situation, has the individual's net worth decreased due to the $150k debt obligation and is no longer an accredited investor? Or has the individuals net worth remained constant at $1,000,000.01 since no equity was created and the market agrees that the home's value is $200k?
Any insight is appreciated!