Accredited investors are experienced investors with a high net worth or income. For this reason, they have access to specific investment opportunities that are not available to others. They can invest in hedge funds, venture capital funds, private equity funds, real estate syndication deals, and more.

That said, some people wonder if being an accredited investor and accessing these investments is worth it. Does being an accredited investor automatically come with greater returns? Will you earn more than regular people on the street? This is what we are going to explore today.

Accredited investors are recognized by the U.S. Securities and Exchange Commission (SEC) for having enough experience and sophistication to invest in somewhat riskier investments. These investments are limited for a reason. Some of them are riskier than your usual investment vehicles. Accredited investors generally understand the risks associated with these financial investments. And because they have a more significant annual income or net worth, they have a larger financial safety net to protect them if the investments fall through.

Accredited investors enjoy flexibility when it comes to building their investment portfolio. In fact, many investment opportunities available to accredited investors are exempt from registration with financial regulatory authorities such as the SEC. However, they must comply with Regulation D of the U.S. Securities Act of 1933. Accredited investors can explore different investment opportunities and asset classes to diversify their portfolios and build wealth.

HOW DOES THE U.S. SECURITIES AND EXCHANGE COMMISSION DEFINE AN ACCREDITED INVESTOR?

Before discussing the potential returns for accredited investors, let us quickly look at what an accredited investor is, as defined by the SEC. According to the SEC, an accredited investor has an income over $200,000 in the two most recent years, with a reasonable expectation that they will earn the same income level in the current year. [2]

If investing with a spouse, they must have a joint income that exceeds $300,000. This definition is dictated in Rule 501 of Regulation D of the Securities Act of 1933 (Reg. D).

Determining a person’s net worth is another way to see if they qualify as an accredited investor. Based on the net worth test, a person is an accredited investor if their net worth exceeds $1 million. This can be met as an individual, with a spouse, or with a spousal equivalent. [1]

Simply add all your assets and subtract all liabilities to calculate your net worth. Remember that you must exclude your primary residence’s value for this calculation.

It is worth noting that there is no official accreditation process for accredited investors. The burden of proving an investor’s qualifications falls on the investment vehicle. For this, they often require investors to fill out a form and submit certain documents such as tax returns, credit reports, and financial statements.

Some investments are open to accredited investors and sophisticated investors alike. Sophisticated investors have sufficient capital, experience, and net worth to engage in more advanced investment opportunities. [2]

According to the JOBS Act in 2016, an investment vehicle can be made using Regulation D 506(b), which allows up to 35 non-accredited investors to participate as long as they are considered sophisticated. [2]

DO ACCREDITED INVESTORS GET BETTER ROI THAN PEOPLE OFF THE STREET?

Accredited investors can put money into exclusive investments with the potential for higher returns. Technically, this does not automatically translate into greater ROI because every investment is different. There are a lot of different factors that determine whether or not a financial investment will be profitable. Even hedge funds lose money sometimes.

This means that even accredited investors have no guarantee that their investment will yield a high return. But with that said, these investments do offer greater potential returns. [2]

Just like non-accredited investors, accredited investors still must perform their due diligence before investing in these alternative investment opportunities. You must identify your objectives while building your investment portfolio and ensure you are working towards them.

Returns are not guaranteed, no matter what you invest in. These accredited investments are generally riskier, which means the chances of losing your investment are higher. As an accredited investor, you have the experience and knowledge to assess whether it is worth it. At the end of the day, you make your own investment decisions.

WHAT INVESTMENTS ARE AVAILABLE TO ACCREDITED INVESTORS?

Since ROI is tied to the type of investments you choose as an accredited investor, we need to talk about some of the alternative investments that are available to you.

Private placements, online investment platforms, venture capital, alternative assets, etc.—these are some things you want to familiarize yourself with to make the most out of your accredited investor status.

With a high net worth or annual income, you can try out relatively riskier investment opportunities. You may become an angel investor for a small company or a startup. You can look into the world of real estate investing to see properties that are exclusively available to accredited investors.

As high-net-worth (HNW) individuals, accredited investors typically aim to secure, maintain, and grow their wealth. This is possible by doing your due diligence and learning about the various accredited investor opportunities. Investors favor alternative investments with an aggressive investment approach, particularly those who enjoy a bit more risk in exchange for higher returns.

HEDGE FUNDS

Hedge funds are actively managed investment pools that typically use non-traditional asset classes or investment strategies. The manager of an investment company or fund can set aside a portion of their available assets as a hedged bet. They will bet against the fund’s primary focus to offset any losses. [4]

For example, a fund manager for a cyclical sector may devote a portion of the assets to stocks in a non-cyclical sector. This way, if the economy tanks, their losses are offset.

Hedge funds are somewhat similar to mutual funds because career investors professionally manage them. However, the SEC does not strictly regulate hedge funds, which means they are subject to less scrutiny. These hedge funds can apply to different investments, such as shorts, options, and derivatives. [4]

Hedge funds often require a high minimum investment and are not structured to accept non-accredited investors. [3]

To participate in a hedge fund, an accredited investor must select a manager based on their preferred investment approach. Some hedge fund managers use riskier strategies like borrowing money to buy more of an asset and multiply their potential returns. However, this also multiplies their potential losses.

Choose a hedge fund manager who has the same investment philosophy as you. Most hedge fund managers will charge a fee of 1% to 2% of the assets plus 20% of the profits as their “performance fee.”

VENTURE CAPITAL

Venture capital is a form of equity financing. This is where venture capitalists or angel investors fund early-stage companies, small businesses, and promising startups. This is done in exchange for a share of company ownership. The startup or small business can use venture capital funds to grow, expand, or even try new product ideas. [4]

For the accredited investor, this is a risky venture. There is no way to know whether a business will take off. However, this can lead to incredible ROIs because investors enjoy much larger returns when the company proves successful.

Accredited investors can earn back their investment and a significant profit based on the percentage of the company that they own through a liquidity event like an acquisition or public offering.

REITs

Some accredited investors invest in real estate because they know how lucrative it can be. Real estate investing may be the way to go if you want long-term passive income investments. There are plenty of ways to participate in it.

Some investors purchase commercial real estate, while others purchase residential real estate. Some people acquire real estate assets, flip them, and then resell them for a profit.

For accredited investors, there are even more options. A real estate investment trust or REIT is a good example of a real estate investing strategy suitable for accredited investors. REITs pool funds together and invest in various real estate investments. [4]

With REITs, accredited investors do not directly invest in real estate but the company itself. REITs own many different real estate assets in the market. This means investors don’t get to choose what properties to invest in. But generally speaking, REITs can invest in and specialize in apartment communities, condominiums, warehouses, hospitals, and commercial real estate. [4]

But if you want to exert more control over the types of assets you invest in, multifamily private placement could present a good alternative, not because you can decide on which properties go into the fund, but rather because you generally have more awareness of the assets that have been or will be purchased by the sponsor. Typically, private placements will have transparent buying criteria upfront that investors can review in an offering memorandum (a legal document describing the terms and conditions of an investment). Knowing that a private placement firm has a narrowed focus on its chosen assets is also essential. For example, a REIT might include various asset types (residential, commercial, industrial, etc.), classes (A, A-, B+, C, etc.), and investment strategies. However, private placements tend to limit the delta between asset types and classes in a fund to improve efficiency and allow more targeted strategies/solutions. 

MULTIFAMILY REAL ESTATE PRIVATE PLACEMENT (SYNDICATION)

Real estate private placement, or syndication, is somewhat similar to REITs because it involves pooling resources to purchase real estate investments. A private placement or syndication deal is when multiple investors pool resources to buy a single real estate property or a group of properties. This deal is put together by a syndicator, also known as the general sponsor or owner/operator. [4]

The syndicator locates a real estate property, puts the deal together, secures the loan, and looks for investors who will participate. These investors will provide some of the capital needed to acquire the property. [4]

Real estate syndication can be done with any type of real estate, but multifamily syndication is the most popular kind because multifamily properties often generate consistent income.

Multifamily properties such as condominiums and apartment communities have several units, meaning vacancy risk is more easily mitigated. These properties generate consistent cash flow through monthly rental income. Additionally, these large properties are generally more challenging to obtain as a lone investor, so syndication may be an ideal setup.

Investors can participate in multifamily real estate investing with a much lower minimum investment.

The syndicator will also be responsible for property management, meaning passive investors do not have to worry about becoming a landlord. If you are an accredited investor and want to avoid the hassle of owning and managing a property, real estate syndication could be your solution. [5]

Accredited investors do not have to collect rental income, manage residents, handle emergencies, spend money on repairs, etc. The syndicator will hire a third-party property manager to do this, or they will manage themselves. [4]

Investors in the multifamily syndication investment typically hold shares in the entity that owns the property or portfolio of properties. Cash flow from the investment, such as distributions or proceeds from a sale, is generally split amongst the participants. This means investors can receive passive income from rents and the eventual property sales based on their shares, depending on the deal structure.

CONNECT WITH AN INSTITUTIONAL REAL ESTATE OWNER/OPERATOR 

If you want to invest in multifamily apartment communities without the headache of running them yourself, you should work with BAM Capital.

This Indianapolis-based owner/operator has a strong Midwest focus. BAM Capital uses an award-winning multifamily investment strategy that allows investors to grow their wealth through syndication. [6]

BAM Capital prioritizes accredited investors who want to enjoy passive income and all the other benefits of multifamily private placement. As the private equity arm of The BAM Companies, BAM Capital has been focusing on buying the most profitable assets and staying disciplined in its investment thesis. BAM Capital’s investment strategy creates forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units. [6] Remember that no investment is without risk. Before making financial decisions, consult your investment advisor and schedule a call with a BAM Capital investment team member.

Disclaimer: All investments carry risk, including potential loss of capital. This content is for informational purposes only and is not financial, legal, or investment advice, nor an offer or solicitation to buy or sell any security. Consult an independent advisor for personalized guidance and contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Any financial terms, projections, or forward-looking statements contained herein are hypothetical in nature and should not be interpreted as guarantees of future performance or safety. Such statements reflect Bam Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Past performance does not predict future results. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Bam Capital offers investment opportunities under Rule 506(c) of Regulation D exclusively for accredited investors as defined by the SEC. Verification of accredited investor status is required prior to participating in any investment.

© 2025 Bam Capital. All rights reserved.

SOURCES:

[1]: Investopedia. (2024). “How to Become an Accredited Investor.” https://www.investopedia.com/articles/investing/092815/how-become-accredited-investor.asp 

[2]: Peoples Capital Group. (n.d.). “The Best Accredited Investor Opportunities.” https://www.peoplescapitalgroup.com/the-best-accredited-investor-opportunities/#What_is_a_Sophisticated_Investor 

[3]: Investopedia. (2024). “Hedge Fund: Definition, Examples, Types, and Strategies.” https://www.investopedia.com/terms/h/hedgefund.asp 

[4]: Rocket Mortgage. (n.d.). “Accredited Investor Opportunities.” https://www.rocketmortgage.com/learn/accredited-investor-opportunities 

[5]: Investopedia. (2024). “What Is the Stock Market and How Does It Work?” https://www.investopedia.com/terms/s/stockmarket.asp 

[6]: BAM Capital. (n.d.). “Current Portfolio.” https://bamcapital.com/