Accredited or Non-Accredited Investor

Raise your hand if you’ve ever spent time reading the SEC (US Securities and Exchange Commission) website or dug into why this commission exists? I can say that prior to expanding my knowledge base to include Real Estate syndication, the SEC was an acronym that I had no idea about. If you’re in that camp, then hopefully the next few minutes will illuminate the importance of the SEC, and what we do at Pinions Principal Partners to ensure we are compliant with SEC requirements.

In short, the SEC exists in the United States to protect investors and ensure fair information about investment opportunities. The SEC has established two types of investors; accredited and non-accredited. Think of these two categories, like two types of concert tickets.

1. Accredited Investors are like VIP Concert tickets: you get full access to the concert, you may be able to access the concert earlier, you get better seats, etc. You may be able to buy your tickets before general admission, and you may get access to more concerts that are not available to the public. Accredited investors get access to exclusive investments opportunities that are publicly advertised online where non-accredited investors are disqualified from participating, and they bypass some of the red tape.

2. Non-Accredited Investors are like General Admission tickets to the concert: you get access to the show, but it may be more limited/less advantageous than the VIP section, there may be fewer spots for you, and you may not be able to hear about the concert online. In an investment, non-accredited investment opportunities cannot be promoted online (you must know and have an established relationship with the managers directly). Additionally, there are a limited number of spots available in each deal for non-accredited investors, investment sophistication requirements, and other additional disclosures and oversight required by the SEC.

   
   

If you’re curious about whether you may be Accredited or not, here are the requirements, as of the date of this post:

1.      Accredited Investors: you must meet one of these requirements:

a.      Income: $200,000+ per year ($300,000+ with spouse) for the past 2 years, with expectation of same this year.

b.     Net worth: Over $1 million, excluding your primary residence

c.      OR: You hold certain financial licenses (e.g., Series 7, 65, or 82).

2.      Sophisticated (Non-Accredited) Investors: If you don’t meet the above criteria, you are considered a non-accredited investor.  In order to be eligible to participate in many, if not all, of Pinions Principal Partners investment opportunities you’ll need to establish a substantive relationship with us and “have sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of the prospective investment”, per the SEC.  Don’t be dissuaded by this requirement because achieving this level of sophistication in real estate investments unlocks doors you never knew you could open.  We will help you along the way with resources and availability to your questions!

Our goal at Pinions Principal Partners is to have a variety of deal options available to both Accredited and Sophisticated Investors, so that when you’re ready to invest, there is a deal available for you.

We are passionate about this topic and would love to hear from you if you have any questions about the SEC, investor types, or what types of investments we are working on. Reach out to Caleb or I through the link below to schedule a call.

We are praying for you and your family, and we hope you see how God is moving in your life.

Blessings,

Kristin

*Aspects of this article were written with support from ChatGPT