Accredited investors are individuals or entities that meet specific financial criteria, allowing them access to exclusive investment opportunities. Accredited investors have access to investment opportunities unavailable to other real estate investors. Although the risk involved with such investments is higher, it can also mean higher rewards. Experienced investors may find these opportunities attractive.
However, some investors do not know what having an accredited investor status means. An accredited investor may be able to invest in companies in their earlier stages. They can invest directly in these during concept research, development research, and product development. If they meet specific financial criteria, an accredited investor may be given privileged access. They may also invest through hedge funds, private equity vehicles, and venture capital firms.
This criterion, or threshold, protects investors who do not have a financial cushion to fall back on. These investments are limited to accredited investors because they have both a financial cushion in case the investment fails and enough investment experience to know what they are doing. [1]
Here, we will examine the benefits and disadvantages of accredited investor status and explore how one can become one.
WHAT IS AN ACCREDITED INVESTOR?
According to Rule 501 of Regulation D of the Securities Act of 1933 (Reg. D), an accredited investor is defined by the U.S. Securities and Exchange Commission (SEC) as a natural person with income that exceeds $200,000 in each of the two most recent years, with a reasonable expectation of the same level of income in the current year. For spouses, a joint income that exceeds $300,000 is required. [1][2]
An accredited investor may also be a natural person with an individual net worth or joint net worth with the person’s spouse that exceeds $1 million. This net worth excludes the value of the person’s primary residence. Before the passage of the Dodd-Frank Act in 2010, a person’s primary residence was included in determining their net worth. [1][2]
In 2020, an estimated 13,665,474 accredited investor households were in the U.S., representing approximately 10.6% of all households.
SEC AMENDMENTS TO THE ACCREDITED INVESTOR DEFINITION
The SEC’s definition of accredited investors extends beyond financial qualifications to include specific professionals and additional entities. Amendments were introduced on August 26, 2020, and detailed in a press release. These changes expanded the definition to include individuals holding particular professional certifications (like Series 7, 65, and 82 licenses), credentials, designations, and pre-existing net worth and income criteria. Furthermore, certain knowledgeable employees of private funds may also be considered accredited investors. [1][2]
The SEC also included other entities, such as governmental bodies, Indigenous tribes, funds, and entities organized under the laws of foreign countries, that “own” investments (as defined in Rule 2a51-1(b) under the Investment Company Act)exceeding $5 million and were not formed for the specific purpose of investing in the securities offered. [1]
Limited liability companies (LLCs) with $5 million in assets may also qualify as accredited investors, provided they were (similarly) not formed for the specific purpose of acquiring the securities offered.
HOW DO I CALCULATE MY NET WORTH?
Determining your net worth is a good way to see if you qualify as an accredited investor. Those with a net worth over $1 million, individually or jointly with your spouse, are considered accredited investors. [2]
Add all your assets and subtract all your liabilities to find your net worth. To qualify as an accredited investor, you must exclude your primary residence from your net worth calculation. You also have to exclude your mortgage or loan on said primary residence.
Note that if the loan on your primary residence is more than its fair market value, it is a liability in your net worth calculation. It will also be considered a liability if the loan amount on your primary residence increases within 60 days of investing. [2]
For investors looking to invest with their spouse, a property does not have to be held jointly to count toward net worth.
Alternative investment groups may look for your tax returns, financial statements, and W-2 forms, among other income documents, to calculate your net worth.
HOW TO BECOME AN ACCREDITED INVESTOR
To achieve accredited investor status, an investor must meet the net worth or income requirements established by the SEC. Meeting these guidelines makes an investor accredited.
There is no accreditation process to go through. There is also no government agency or independent body that exists to give qualified investors accreditation. This means there is no exam or piece of paper to acquire. [1] However, BAM Capital and other multifamily private placement (syndication) companies require proof of investors’ accreditation status, which can come from a letter from a potential investor’s CPA stating that they are accredited.
Instead of an accreditation process, the companies that issue unregistered investments and securities are in charge of identifying a potential investor’s qualifications.
Once you have met these guidelines, you can invest in securities not registered with the SEC.
DUE DILIGENCE FOR ACCREDITED INVESTORS
No institution or agency expressly confirms an investor’s accreditation. No certifications are issued. However, the SEC requires companies and individuals selling to accredited investors to verify their status. Before the SEC made it a requirement in September 2013, investors could simply check a box that said they were qualified investors. Needless to say, this is no longer possible. [1]
Investors who think they qualify can ask about potential investment opportunities with the securities issuer, which may provide a questionnaire that will help determine whether they are eligible as an “accredited investor.” This questionnaire typically requires the attachment of financial statements and other accounts, which will allow the fund to verify the ownership of assets. The company will then evaluate a credit report to assess any debts the individual holds.
Those who want to use their annual income as the basis of their qualifications will likely have to submit W-2 forms, tax returns, and similar documents to prove their wages.
BENEFITS OF BEING AN ACCREDITED INVESTOR
Being an accredited investor has many pros and a few cons. The primary benefit is that accredited investors have access to investment opportunities that others with less wealth do not, allowing them to increase their wealth even further.
The investments available to accredited investors often have higher rates of return and better diversification. These investments can help accredited investors build wealth within a shorter period of time.
One example of this is hedge funds. Accredited investors can invest in hedge funds because these require high minimum investment amounts. Most accredited investors invest in a hedge fund because the potential returns are historically exceptional despite the higher risks. [1]
Investors aware of their accredited investor status can take advantage of it by finding higher-yield investment opportunities. Accredited investors can also invest in small businesses or businesses still in development.
Another benefit of becoming an accredited investor is portfolio diversification. Investing in public markets and relying solely on them can limit your diversification options. However, accredited investors can quickly diversify their portfolios by finding alternative investments and assets.
DISADVANTAGES OF BEING AN ACCREDITED INVESTOR
Accredited investors also have a few disadvantages. The main one is that the investment opportunities available to them are generally higher-risk investments. The idea is that an accredited investor should have more knowledge and experience regarding riskier investments and can, therefore, make better financial decisions.
Naturally, these riskier investments also come with higher minimum investment amounts. It is not enough to deposit just a few thousand dollars into these investments. Accredited investors usually put in a few hundred thousand or even a few million dollars to participate. Only accredited investors can access these investments because they are more likely to survive such an event since they have a safety net.
An investment advisor could tell you that these unregistered securities available to accredited investors usually have a long capital lock-up time or illiquidity. This means your money will be locked up for much longer—anywhere from a year to several years. You simply cannot pull that money out anytime you want. As an accredited investor, you have to get used to this illiquidity.
DO YOU HAVE TO PROVE YOU ARE AN ACCREDITED INVESTOR?
The short answer is yes; potential investors must provide a letter from their Certified Public Accountant (CPA) or Registered Investment Advisor (RIA). The company, fund, or investment vehicle itself has the burden of proving that an individual is an accredited investor.
To demonstrate their accreditation, a person wanting to invest in these accredited investments will likely have to fill out a questionnaire and provide certain documents, such as financial statements, tax returns, and credit reports.
Either way, it is risky to participate in these investments without being an accredited investor because you do not have the financial cushion necessary if the investment does not work out. Lying about being an accredited investor is generally not a good idea.
HOW MUCH CAN AN ACCREDITED INVESTOR INVEST?
Accredited investors are typically wealthy individuals. This is why they can invest in non-registered investments such as hedge funds, private equity, venture capital, and angel investments.
There is no particular limit to how much an accredited investor can invest from their capital. With that in mind, each fund or deal may have limitations on the investment amounts they will accept from a particular investor.
INVESTMENT FOR ACCREDITED INVESTORS: MULTIFAMILY PRIVATE PLACEMENT (SYNDICATION)
Accredited investors can access investments that are not usually available to everyone else. This applies to real estate investments as well. When it comes to multifamily private placement or syndication, plenty of investments are only available to accredited investors.
Real estate can be a solid investment vehicle during economic uncertainty because people need a place to live, even during a recession. Apartment buildings, condominiums, and other multifamily properties can generate consistent cash flow even during uncertain times, making them potentially recession-resistant investments.
Purchasing real estate also means taking on the responsibilities of a landlord. However, that is not the case with multifamily private placement (syndication).
Multifamily private placement, also called syndication, is one way for investors to get into real estate investing without taking on any of the usual responsibilities associated with owning and running a multifamily property.
A private placement/syndication deal is when multiple investors pool their resources to purchase a single real estate property. This can be done with almost any real estate property, but multifamily syndication is the most popular because of its strong and reliable cash flow. [1]
An owner/operator (syndicator) or primary sponsor puts everything together in a syndication deal. They locate the investment property, secure the loan, and find passive investors to participate in the deal. These passive investors are accredited investors who want to diversify their portfolios through real estate.
The syndicator not only puts the deal together but also manages the property. This means investors do not have any responsibilities when it comes to actually running the apartment building. They don’t have to deal with residents, deal with emergencies, handle repairs, etc. This can make multifamily syndication a truly passive investment. [1]
They supply only a portion of the capital needed to acquire the property. Upon resale, they earn from the cash flow, equity, or both.
WORK WITH BAM CAPITAL FOR MULTIFAMILY PRIVATE PLACEMENT (SYNDICATION)
BAM Capital is an Indianapolis-based syndicator with a strong Midwest focus that helps accredited investors invest in real estate. BAM Capital prioritizes Class A multifamily assets with in-place cash flow and proven upside potential. [3]
BAM Capital is known for its unmatched real estate expertise, transparency, and ability to mitigate investor risk while creating forced appreciation. BAM Capital locates high-quality real estate opportunities and negotiates the purchasing and financing on your behalf. They take care of everything from start to finish, making it a proper passive investment. [3]
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 aims to create forced appreciation while mitigating investor risk. To date, the brand has successfully managed over $1.7 billion in assets across ~9,000 apartment units. [3]
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]: BAM Capital. (2025). “Accredited investor requirements & what you need to know.” https://bamcapital.com/what-is-an-accredited-investor/
[2]: Investopedia. (2024). “How to Become an Accredited Investor.” https://www.investopedia.com/articles/investing/092815/how-become-accredited-investor.asp
[3]: BAM Capital. (n.d.). “Current Portfolio.” https://bamcapital.com/
