Non-Accredited Investor Opportunities

by Lauren Campbell

“If you are not in the process of becoming the person you want to be, you are automatically engaged in becoming the person you don’t want to be.”

- Dale Carnegie

In the beginning of your real estate investment career, you’re likely looking for the perfect place to invest your hard earned capital. If you’re like most of us, perhaps you’ve spent time searching the world wide web for “easy passive income” or “investment opportunities” only to find that some of these great looking deals are open only to Accredited Investors.

Suddenly, you realize there’s more to investing than just stowing your money in something and hoping to hit a jackpot in returns.

Accredited Investors Vs Sophisticated Investors Vs Non-Accredited Investors

What’s Accredited?

When I first started dipping my toes into real estate investment, I had no idea there were levels to it. Accredited sounded like a fancy label and I didn’t know there were different types. If you’ve been following our blog a long time, perhaps you’re very familiar with the terms.

To qualify, any but not all of the following must be met:

If the aforementioned list doesn’t describe you, you’re likely to fall under the Non-Accredited category, or perhaps Sophisticated.

Wait - there’s more? What’s Sophisticated?

A sophisticated investor is an individual who is non-accredited but has the business acumen and experience to evaluate the risks and merits of an investment but doesn’t meet the financial requirements of an Accredited Investor.

If you’re just starting off and neither Accredited or Sophisticated Investor adequately describes you, then you would fall under the non-accredited category. Don’t fret, just because there are certain restrictions to the deals you’re able to enter into, doesn’t mean there aren’t plenty of non-accredited investor opportunities available.

Let’s dive in, shall we?

5 ways you can invest in Real Estate as A Non-Accredited Investor

1. Buy and Hold Rental Properties, House Hacking, Fix-and-Flip, and the BRRRR Method

There are many great ways for newbies or non-accredited investors to get into the real estate investing game. Buy and hold rental properties, house hacking, fix and flip, and the BRRR method are some of the most common. When our company was in its infancy, we did a lot of this type of investing.

These methods tend to come with a lot of your time sacrificed and being your own landlord. Not necessarily easy passive income and a lot of learning as you go.

2. Private Real Estate Syndications

This type of passive investment has been our bread and butter for years! Syndications are where investors of all types and classes can pool their resources to invest in a larger real estate asset. In a real estate syndication, investors are typically hands off or passive and let General Partners take the lead on decision making and renovations, etc.

As a non-accredited investor, you may find there are a limited number of spots open to you, as SEC regulations require many of these investors be accredited and deals are not publicly advertised. However, there are plenty of deals if you know where to look. We have a wonderful investor club that helps cherry pick such investments and provides great networking opportunities!

We like syndications because they are typically a lower level of risk and less work for the average investor. Many of our syndications are held for 3-5 years.

3. Joint Venture Partnerships

A Joint Venture Partnership is similar to a syndication however it is typically a small group who invests together to purchase a piece of real estate, sometimes it’s as little as two partners. There aren’t any passive investors as the property renovations and other managerial tasks are split amongst the partners.

We have used Joint Venture Agreements with partners when purchasing homes that are to become short term rentals. They typically need about 3 months of active rehab and furnishing before they are ready to be listed and investors are able to get their capital back plus an annualized return after refinancing down the road. Medium risk and higher level of work for those who enjoy being more hands on.

4. Real Estate Crowdfunding Platforms

Real estate crowdfunding platforms are where you can invest capital in exchange for a portion of the returns without having to do any of the work. Again, many of these opportunities are for accredited investors only though some real estate crowdfunding sites offer real estate investment trusts (also known as REITs) for non-accredited investors.

REITs are great for passive investing and typically require low minimum investments with low risk and a low threshold of work involved, even if they don’t typically allow direct ownership.

We have recently used crowdfunds like Invown to help get our non-accredited network of investors involved in an accredited deal. Once the platform's goal is reached in soft commitments, everyone completes the necessary paperwork, funds the deal and is part of the investment.

5. Private Lending or Debt Investment

Did you know that you can invest in real estate debt? Typically, this is where you loan someone money to complete a real estate project, such as rehabbing a short term rental. You don’t have to be hands-on in the home purchase or sale, renovations, and you can be non-accredited.

For example, you could loan capital for 12 months at 10% interest. The borrower is able to complete the rehab within the 12 month period using your loaned capital, and you earn 10% on the loan. Because it’s backed by the property, the risk and workload is lower.

This is great if you’re a full time W-2 earner with little time to get involved in your own projects but happen to have a surplus of capital and are okay getting paid back with interest over a short period of time. A win win for both the borrower and the lender!

IN FINAL

If you’re starting out in real estate investing, certain investments will be unavailable to you. However, as a non-accredited investor, there are so many opportunities to dive into that will create passive wealth and help you go from non-accredited, to sophisticated, and eventually accredited investor. If the goal is financial freedom, you’re already on the right track and well on your way.

Happy Investing!

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