When you’re looking for a way to grow your wealth, a good way to diversity your portfolio would be to invest in real estate. You’ve probably read a whole lot about why real estate and Multifamily in particular, is a great asset class. Here’s a refresher Top 3 reasons to invest in Multifamily
One option to invest in Multifamily is through syndication. These are offered as private securities and follow the SEC guidelines. These guidelines require investors to be either accredited or sophisticated investors to participate in these private offerings.
So, what defines these kinds of investors? Here a quick brief –
An individual will be considered an accredited Investor if he or she:
- 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 and any loans secured by the residence (up to the value of the residence))
According to SEC, sophisticated Investors must have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the prospective investment.
The definition of sophisticated investor is little vague but it basically means that you are knowledgeable and experienced enough about the risks involved in these securities (and are willing to take those risks).
Hopefully that clarifies it and now you know which category of investor you are. Always check with your financial advisor or syndicator about risks before investing in private securities like those offered by Multifamily syndication.