STRATEGY
OPPORTUNITIES
Becoming an Accredited Investor
WHERE DO YOU GO TO FIND REI OPPORTUNITIES IF YOU ARE NOT ACCREDITED?
by Ellis Hammond
here is a famous scene in “The Matrix” when Neo is asked if he wants to take the red pill or the blue pill.
sor. If you are not already on their email list, it’s likely you are not seeing this matrix of deals. What do you do if you are not yet an accredited investor but would like to invest passively in alternative invest - ments like real estate? OPTION #1 BECOMEANACCREDITED INVESTOR. Unfortunately, this is not just something you can sign up for. The following definition is pulled from the SEC website: The SEC determines an accredited investor as earned income that exceeded $200,000 (or $300,000 together with a spouse) in each of the prior two years, and reasonably expects the same for the current year, OR has a net worth over $1 million, either alone or together with a spouse (excluding the value of the person’s primary residence). The SEC has also recently included a few new exemp - tions including holders in good standing of the Series 7, Series 65, and Series 82 licenses as qualifying natural persons. But most of the investors I talk with daily are unable to qualify under these restrictions. OPTION #2 NETWORKTO FIND QUALIFIED OPERATORS In my experience, the best way to find great investment opportunities is to network. This does take a bit more work since you can’t go to your financial advisor and ask to be shown these deals. If you are serious, however, and looking to maximize your returns, then the extra work can be worth it.
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The blue pill will allow him to continue living his normal life even though he feels deep inside there is more out there to experience. The red pill will open an entire new world for Neo, a world that he never even knew existed. I like to describe discovering the world of alternative investing as taking the red pill for the first time. I had no idea there was this world of private investing that allowed me to diversify my portfolio from Wall Street and invest alongside incredible experts and real estate profession - als. It almost made me feel like I was living in the matrix because so many people didn’t know about these oppor - tunities. Since then, I have made it a goal to share this world to my network of friends and investors. I’ve started a weekly podcast to interview other real estate operators and I cre - ate daily content on LinkedIn and other platforms talking about passive investing in alternative investments, mainly multifamily real estate. But I still see a huge problem for most investors… they still don’t know where to find great investment opportu - nities. The fact is, if you are not an accredited investor, you can’t just Google investment opportunities. The reason is because the U.S. Securities and Exchange Commission (SEC), prohibits sponsors and operators from accepting non-accredited investors if they choose to broadly solicit deals. This means that most of the non-publicly traded invest - ment opportunities are only accessible to non-accredited investors if they have a prior relationship with the spon -
62 | think realty magazine :: december 2020
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