What Is an Accredited Investor?

An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities. They are entitled to this privileged access by satisfying at least one requirement regarding their income, net worth, asset size, governance status, or professional experience.

To be an accredited investor, a person must have an annual income exceeding $200,000 (or joint income exceeding $300,000 with a spouse) for the past two years (with the reasonable expectation to continue earning the same or higher).

Note: The income test cannot be satisfied by showing one year of an individual’s income and joint income for the other.

A person is also considered an accredited investor if they have a net worth exceeding $1,000,000, either individually or jointly with their spouse – excluding their primary residence and the mortgages on it.

The SEC also considers a person to be an accredited investor if they are a general partner, executive officer, or director for the company that is issuing the unregistered securities, or if they are a registered broker or an investment advisor.

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As mentioned above, an entity can also be considered an accredited investor if it is a private business development company or an organization with assets exceeding $5,000,000. Also, if the entity consists of equity owners who are accredited investors, the entity itself is an accredited investor. However, an organization cannot be formed with the sole purpose of purchasing specific securities.

Note: Any investment in real estate, and this fund is no exception, has inherited risks. The above is just general information and does not represent the terms of any specific fund investment. Please review the Offering Memorandum and Private Placement Memorandum for the full terms and conditions. Please consult with legal, financial, and tax professionals before making any investment decisions.