What Type of Investor Are You? Accredited vs Sophisticated Investors
Are you curious about how to invest in real estate? What are all the things you need to know to get started? This article is a great place to start learning about the two primary types of passive investors in real estate deals: accredited and sophisticated investors. If you are not 100% sure what that means and how it can benefit you, read on.
Investors aren't all the same, and the law recognizes that by creating different categories for different types of investors.
Picture this: You stumble upon a fantastic real estate opportunity—a group of folks teaming up to buy a big, profitable apartment complex. It seems perfect for diversifying your investments and securing some passive income for financial freedom.
But then you read the fine print: "Only accredited investors allowed."
Why the restriction? It's all about protecting regular folks from jumping into deals they might not be ready for. We're talking about stuff like pre-IPO sales, mergers, real estate deals—lots of potential profit, but also lots of risk.
So, how do you know if you're an accredited investor in the US?
Ask yourself:
Do I make at least $200,000 a year?
Have I made that much for the past two years, with the expectation of making the same or more this year?
Do I have a net worth of at least $1 million?
If you answered yes to all these, congrats! You're accredited. These rules, set by the Securities and Exchange Commission (SEC), determine if you've got the funds to dive into higher-risk, higher-reward investments.
Now, what about sophisticated investors? Well, it's less about money and more about know-how. A sophisticated investor is someone who really understands the ins and outs of real estate investing—cash flow, taxes, business, all of it. They might not meet the financial criteria for accreditation, but they've got the smarts to handle more complex investment opportunities.
In 2020, the SEC expanded the definition of an accredited investor to include folks with certain professional knowledge or experience. This shows that having heaps of cash isn't enough to ensure smart investing.
At Resilience Equity, we believe everyone deserves expert guidance to make the most of their money. Whether you're a seasoned pro or just starting out, our team can help you reach your investment goals and find the perfect project for you.
Investing in apartment communities with us is easy and worry-free, giving you passive income to live the life you've always wanted. Ready to make smart money moves? Schedule a chat with one of our advisors today.
