Accredited Investor: Process, Opportunities and Qualification
In part one of this multi-part blog series, we went over some basics on what defines an accredited investor within the investment world. This term, which is used for individuals with higher net worth and allows them certain unique investment opportunities, is a desirable one for many investors to achieve.
At Fox Financial, we work with many accredited investors when it comes to our investment properties and forms of real estate investment, including passive real estate investment. How does one become an accredited investor through a certification process, and what kinds of investment avenues are available to you if you’re able to achieve this status? Part two of our series will dig into this while also discussing some of the early steps you can take toward becoming an accredited investor.
Certification Process
Accredited investors are a unique area within this realm, largely due to the fact that there is no central governing body that certifies accredited investors. Rather than the SEC or some other group making this determination across all cases, they have instead placed this burden on the company issuing the investments.
Essentially, if you come to a money lender or another investment professional in the field, you will likely be asked if you qualify as an accredited investor. If you say yes, they will require evidence to prove this – anyone who raises money from accredited investors is responsible for this verification on their own end, and could be vulnerable to SEC claims later if they do not.
Unique Investment Opportunities
Being an accredited investor allows you to be involved in investments that aren’t fully regulated or are not registered with the SEC, which can be a major benefit. It opens up several unique avenues only available to accredited investors:
Real estate syndications: Private investments in apartments or other commercial buildings by a group of investors who partner together.
Crowdfunding investments: There are limited such platforms for non-accredited investors, but many more for accredited ones.
Venture capital: In most case, venture capital companies try to raise money privately through accredited investors.
So how do you get on the road to becoming an accredited investor if you don’t currently qualify? Our next several sections will dig into this.
Income Track
If your current career track has an income ceiling that’s too low for accredited investments, it could be time to consider others. This might mean getting new professional certificates ort even a new degree, or it could refer to moving into management when you’ve typically been a lower-level employee.
Increase Earnings
There are also other ways to increase your earnings without altering your career. One is to start a side gig of some type, if you have the time – many participate in the gig economy or begin a hobby business that brings in extra money.
For more on accredited investors and how to become one, or to learn about any of our real estate investment services, speak to the staff at Fox Financial today.