Benefits of Partnering With Accredited Investors in Real Estate Venture
Many investment opportunities, such as real estate crowdfunding, angel investing, or debt syndication, are only available to accredited investors. Getting accredited investor status is a challenging process.
One must demonstrate a high level of income or net worth to qualify. Generally, individuals who earn $200,000 or more annually (or $300,000 or more jointly with their spouse) and have a net worth of $1 million or more are considered accredited investors.
Access to Exclusive Opportunities
Accredited investors, such as the ones you can partner with at caliberco.com can access private investments that aren’t available to unaccredited individuals. These deals often involve specialized real estate projects, such as large-scale value-added multifamily or retail property investments. These deals often offer higher returns than would be seen in the typical commercial property market.
This level of exclusivity can come with some downsides, however. To qualify as an accredited investor, you must have a net worth that exceeds $1 million (individually or jointly with your spouse) and have made more than $200,000 per year over the past two years.
This exclusivity can make it difficult to build a strong investor network. To overcome this challenge, creating valuable educational resources for potential investors is important. This will help you establish credibility, leading to more successful leads and funding partners. A good example is a crowdfunding platform like Parvis, which allows accredited investors to participate in property development through fractional ownership.
Higher Returns
Real estate investing is a great way to build wealth. However, finding deals that return substantial capital on investment can take time and effort. The best investments often come with high-quality and reputable property developers.
Accredited investors can access real estate syndication opportunities that provide significantly higher returns than traditional SEC-governed options. They can also add valuable tax benefits to their portfolios that aren’t available with traditional investments.
The definition of accredited investors has changed from one that largely focuses on income and net worth to an approach that combines financial resources and investor knowledge. As a result, many real estate investing sponsors target their sales efforts to accredited investors.
FNRP is an example of a platform that caters to accredited investors looking for institutional quality commercial real estate deals. The platform offers a variety of on- and off-market investments that are sourced by the FNRP team. FNRP focuses on opportunities with top-tier national-brand tenants that offer stable cash flow and a long-term, passive income stream.
Flexibility
One of the biggest benefits of partnering with accredited investors is that they can offer you access to investment opportunities that aren’t available to the general public. These may include hedge funds, hard money loans, or any other type of security not registered with the financial authorities.
The SEC defines an accredited investor as an individual whose net worth (total assets minus liabilities) surpasses $1 million. This includes natural persons who have earned incomes exceeding $200,000 in the past two years or joint income with a spouse exceeding $300,000 per year.
These high standards protect people with limited financial knowledge from risky ventures and losses they’re ill-equipped to handle. However, they also limit the potential pool of people who can invest in real estate syndication deals. With a strategic approach to legal fundraising and connecting with capital partners, you can overcome these challenges and build a pipeline of quality deals.
Liquidity
Many private-placement investment deals, venture capital funds, and crowdfunding property investing opportunities are open to accredited investors only. This is because these investors have the financial capacity to assume greater levels of risk.
Accredited investors also receive higher returns on their investments. The average return in the stock market is 8%, while some real estate development deals may yield 15 to 25%.
Accredited investors also have access to exclusive information on properties and locales nationwide, which is a valuable asset for commercial real estate (CRE) syndication investments. Property developers of large multifamily, multi-purpose, or other commercial properties often provide this information to investors based on their status as accredited investors. These individuals or entities meet the income or net worth thresholds set by the Securities and Exchange Commission for a person or entity to qualify as an accredited investor. This equates to a minimum of $200,000 in individual annual income or $300,000 with a spouse over the past two years or a net worth exceeding $1 million.
