What Is an “Accredited Investor?”
As a commercial real estate syndicator, we present opportunities for interested investors to join us in upcoming acquisitions or new construction of self-storage facilities. However, in order for someone to partake in an investment, they must be considered an accredited investor.
What, exactly, is an accredited investor, and how do you know if you qualify? Below we’re covering the basics of who an accredited investor is and what you need to know if you’re interested in becoming one.
How the SEC Defines “Accredited Investor”
The term “accredited investor” is used to describe investors or entities who may participate in opportunities outside of traditional investments regulated by the SEC (stocks, mutual funds, ETFs, etc.). Accredited investors can join an investor pool for start-ups, private equity firms, or, in the case of Belrose, commercial real estate sponsors.
Accredited investors come in many forms. For our sake, however, we’re focused primarily on high-net-worth individuals and couples. They can also be finance companies or professionals with experience in private equity and complex trading.
Individual Investor Qualifications
The purpose of implementing accredited investor requirements is to keep average-earning investors (who may not fully understand the nuances of private investing) from putting too much of their available capital into an investment the SEC deems riskier than traditional investment opportunities.
However, for those who do meet the criteria to become accredited investors, this distinction opens up opportunities to participate in alternative investments that may be better suited to meet their goals. At Belrose, for example, we use self-storage investing to help our community of private investors incorporate security, growth, and reliable income into their portfolio — a combination of goals that may not be achievable when investing in the stock or bond market alone.
To become an accredited investor, you need to:[1]
Have a net worth of $1 million or more (excluding your primary home), or
Earn over $200,000 annually ($300,000 if married) for the two years prior to seeking accreditation — and anticipate earning the same or more during the current year.
Professional or Entity Qualifications
In addition to individual investors, the SEC allows certain entities or financial professionals to be accredited investors as well. As recently as 2023, the “Fair Investment Opportunities for Professional Experts Act” was introduced, which allows people who have “professional knowledge through educational or professional experience” to qualify as accredited investors.[2]
Financial professionals who hold their Series 7, Series 65, or Series 82 financial securities licenses can be considered accredited investors, as well as “knowledgeable employees” of a private fund or family office.
In addition, certain entities qualify including:[3]
Bank or savings and loan associations
Insurance companies
Registered investment companies
Small business investment companies
Broker-dealers
Employee benefit plans (such as a 401(k) plan) with assets exceeding $5 million
Charitable organizations with assets exceeding $5 million
Corporations, LLCs, or partnerships with assets exceeding $5 million
Trusts with assets exceeding $5 million
How to Become an Accredited Investor
The SEC does not offer a standard qualification process. Instead, it’s up to the individual organization seeking accredited investors to collect the necessary information and verify qualifications.
The sponsor or organization will ask you to provide certain financial documents (such as W-2s, tax returns, or brokerage statements) to prove that you either meet the income or net worth requirements.
Interested in Investing with Belrose?
People sometimes hear the term “high-net-worth” and assume they don’t qualify. However, the SEC’s accredited investor requirements for individual investors haven’t changed in years. Even if you (or you and your spouse) may not have qualified a few years ago, it’s possible that with recent changes in home values, inflation, and market performance your net worth has grown.
If it’s been a while since you reevaluated your net worth or income sources, you may find that qualifying as an accredited investor with Belrose is a more attainable goal than you thought. To learn more about self-storage investing and our upcoming opportunities, join our investor portal today.
Sources:
[2] Fair Investment Opportunities for Professional Experts Act
[3] What is an accredited investor?
