Accredited Investor Requirements Explained

If you're considering investing in a private real estate syndication, you've likely encountered the term "accredited investor." Here's what it means and why it matters.

SEC Definition

The Securities and Exchange Commission (SEC) defines an accredited investor as someone who meets at least one of the following criteria:

Income Test:

Individual income exceeding $200,000 in each of the two most recent years, with a reasonable expectation of reaching the same level in the current year

Joint income with a spouse or spousal equivalent exceeding $300,000 for those same periods

Net Worth Test:

Individual or joint net worth exceeding $1 million, excluding the value of your primary residence

Professional Certifications:

Holders of certain FINRA licenses (Series 7, Series 65, or Series 82)

Why Does Accreditation Matter?

Under Regulation D, Rule 506(c), companies raising capital through private placements can only accept investments from verified accredited investors. This SEC rule allows general solicitation (marketing the offering publicly) but requires the sponsor to take "reasonable steps" to verify each investor's accredited status.

How Verification Works

Sponsors must verify accreditation through one of several methods:

**Income verification:** Review of tax returns, W-2s, or written confirmation from a CPA, attorney, or financial advisor

**Net worth verification:** Review of bank statements, brokerage statements, and a credit report

**Third-party verification:** Use of a licensed verification service

What This Means for You

Most high-earning professionals — doctors, lawyers, dentists, business owners, and senior executives — qualify as accredited investors. If you're unsure whether you qualify, we're happy to walk through the requirements with you. The verification process is straightforward and confidential.