Opportunities for Accredited Investors

“Accredited Investor” or “Qualified Investor” is a term that is sometimes thrown around pretty loosely in investment circles. What exactly does it mean, and what are the benefits of qualifying as an accredited investor? I have been asked these questions on a number of occasions; so I feel this topic warrants a bit more explanation. Every investor can benefit from a better understanding of key investment terms, and some of you may even qualify as accredited investors and not be aware of it.

What is it?: Accredited investor is a term defined by various securities laws that delineates investors permitted to invest in certain types of higher risk investments (including real estate), limited partnerships, hedge funds and angel investor networks. The term generally includes wealthy individuals and organizations such as a corporation, endowment or retirement plans.

For our purposes, we will focus on individuals rather then organizations.In the United States, for an individual to be considered an accredited investor, he must have a net worth of at least one million US dollars or have made at least $200,000 each year for the last two years ($300,000 with his or her spouse if married) and have the expectation to make the same amount this year. This rule came into effect in 1933 by way of the Securities Act of 1933.

The exact definition comes from the federal securities laws, Rule 501 of Regulation D , and is as follows:

A natural person who has individual net worth, or joint net worth with the person’s spouse, that exceeds $1 million at the time of the purchase;

A natural person with income exceeding $200,000 in each of the two most recent years or joint income with a spouse exceeding $300,000 for those years and a reasonable expectation of the same income level in the current year.

Why?: The SEC has established criteria for preventing people who perhaps need more investing experience from investing in unregistered securities and/or real estate opportunities that are less well known than stocks and bonds. The idea is that the SEC is trying to protect investors that lack the needed investing experience and/or disposable capital to get involved in higher risk investments. There are some assumptions that go along with being an accredited investor. An investor who meets the foregoing standards is considered an accredited investor, and should also meet at least one of the following criteria:

A) The accredited investor or his professional advisor can be reasonably assumed to have the capacity to protect his own interests in connection with the transaction by reason of his business experience or the business or financial experience of his advisor.
B) The accredited investor can reasonably be assumed to be capable of bearing the economic risk and can reasonably be assumed to not require immediate liquidity pursuant to his investment in the securities.
C) The accredited investor can reasonably be assumed to have net worth adequate so as investment in the securities does not exceed ten percent of the investor's net worth.

Benefits of meeting these standards?:

• If you fit into this category you may be eligible for many investment opportunities such as hedge funds, commodity funds and special public funds that other investors are not allowed to participate in.
• The key is that many higher risk, and thus higher reward, investments are only available to qualified “accredited investors.”
• The main benefit to qualifying is that you gain access to investments, and greater returns, that “average” investors can not access.
• Quite simply, it comes down to convenience and privacy for the investment managers. By marketing securities only to accredited investors, a fund or company can avoid many of the filing requirements to which most public companies are subjected.

Opportunities: Do you qualify as an accredited investor? Do you know someone that qualifies as an accredited investor? PropertyVestors, an investment group of CEOs, entrepreneurs and savvy real estate investors, currently has real estate investment opportunities open to accredited investors. If you or someone you know has interest in these great opportunities, please contact us as soon as possible. These types of opportunities do not last long! You can find us as http://www.propertyvestors.com/, or you can contact us directly at invest@propertyvestors.com or call 1-877-90-BUYER.About

The Author
Sarah Barry is the founder of PropertyVestors (http://www.propertyvestors.com/). PropertyVestors is a successful real estate investment group that creates above-market returns at below-market risk. Access to PropertyVestors' three smart real estate strategies enables investors to achieve double to triple digit returns on their real estate investments.