On account of the popularity of peer-to-peer (p2p) platforms and crowdfunding, especially as it relates to the real estate sector, there are a wide range of opportunities now available for other types of investing besides those involving public stocks. Many of these opportunities, however, require an accredited investor verification letter.
Let’s first look at how you become an accredited investor.
What is an Accredited Investor?
In simple terms, an accredited investor is an individual or entity that is recognized as capable of handling or absorbing certain levels of risk connected with particular investment offerings. These opportunities can involve private placement deals, venture capital funds, hedge funds, real estate crowdfunding, or real estate ICOs (initial coin offerings).
Accredited investors have excellent choices regarding the many investment opportunities available beyond securities listed on the stock exchanges. The entities that offer these investment opportunities also benefit by having individuals at an accredited investor level buying into their projects.
The Requirements
For individuals, there are two major tests in order to qualify and receive an accredited investor verification letter. These are:
* Possessing yearly income of $200,000 minimum (or for joint income with a spouse – $300,000) for the previous two years with anticipated earnings in the current year meeting that threshold as well; or
* Possessing net worth greater than $1 million (individually or jointly with their spouse)
You are not permitted to include the value of your primary residence when you calculate net worth as it regards accredited investor verification criteria. However, a mortgage on the primary residence is not counted against you in the calculation up to fair market value. Also, regarding net worth calculations, a property does not need to be held jointly if you have a spouse.
Entities and institutions can qualify as accredited investors under other tests.
Actually, many people believe that some of the best opportunities for investing for an accredited investor is in the real estate sector. If you have received an accredited investor verification letter, you can participate in potentially high profit commercial real estate opportunities from a number of different platforms, including: RealCrowd, Lending Home, RealtyShares, CrowdStreet, Sharestates, PeerStreet, Realty Mogul, and Patch of Land.
Conclusion
Accredited investors have the opportunity to participate in some of the best investment options available, including those in the real estate sector. If you have attained this investment status, explore your options carefully and consider any possible opportunities that are reputable and viable.
