Are You an Accredited Investor? What It Means and Why It Matters
Most private real estate offerings, including multifamily syndications and funds, are open only to accredited investors. If you’re considering passive real estate investing, this is usually the first question to answer.
What Is an Accredited Investor?
An accredited investor is an individual or entity that meets financial or professional criteria set by the U.S. Securities and Exchange Commission (SEC). These rules allow qualified investors to participate in private offerings that aren’t registered with the SEC.
There’s no application or certificate. You qualify by meeting the criteria, and each offering confirms your status before you invest.
How Individuals Qualify
You’re an accredited investor if you meet any one of the following:
1. Income
You earned more than $200,000 in each of the past two years, or more than $300,000 together with your spouse or spousal equivalent, and you expect the same this year.
2. Net Worth
Your net worth exceeds $1 million, alone or together with your spouse or spousal equivalent. Your primary residence doesn’t count toward this total.
3. Professional Credentials
You hold a Series 7, Series 65, or Series 82 license in good standing.
Investing Through an Entity
You can also invest through an LLC, trust, or other entity. Generally, an entity qualifies if all of its owners are accredited investors, or if it meets certain asset thresholds. Rules for entities are more detailed, so confirm with your advisor.
Why It Matters
Private offerings are typically structured under one of two SEC rules:
- Rule 506(b): Sponsors can’t publicly advertise the offering. A limited number of non-accredited investors may participate under certain conditions, though many sponsors accept only accredited investors.
- Rule 506(c): Sponsors can advertise publicly, but every investor must be accredited, and the sponsor must take reasonable steps to verify it.
How Verification Works
For 506(b) offerings, investors typically confirm their status in a questionnaire. For 506(c) offerings, sponsors must verify it, usually through:
- A letter from your CPA, attorney, or financial advisor
- Tax returns or W-2s (for the income test)
- Bank and brokerage statements, along with a credit report (for the net worth test)
Not Sure Whether You Qualify?
We’re happy to walk you through it. Schedule a discovery call, and we’ll help you understand where you stand and which opportunities may fit.
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This article is for general educational purposes and isn’t legal or tax advice. Accredited investor rules can change. Consult your advisor about your specific situation.
Verification notes for you (not for publishing):
- As of October 2026, no new SEC designation had been made, and the current definition is unchanged. However, there are September 2026 credential proposals (CPA, CFA, CFP, Series 79/86/87) that are not yet in force. If those are adopted, add them to section 3. altssaltss
- The income test is $200k/$300k and the net worth test is $1M excluding your home, and the professional pathway currently covers only three licenses: as of 2026, only those three FINRA licenses count. thestartuplawblogjoinaccredited
- Have your securities attorney review the 506(b) and 506(c) descriptions before publishing.
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