Table of Contents
1. Assets that Count Toward Accredited Investor Levels
2. How to Become an Accredited Investor
3. How to Calculate Your Net Worth
4. Advantages and Disadvantages of Being an Accredited Investor
5. How Much Can an Accredited Investor Invest?
6. Investment Opportunity for Accredited Investors: Multifamily Syndication
7. Work with BAM Capital for Multifamily Syndication
8. BAM Multifamily Growth & Income Fund
Not everyone can make all types of investments. Some investments, such as hedge funds and venture capital funds, are limited to accredited investors. These exotic investments are typically free from the rules and regulations that normally protect investors from the risks involved. This is why only those who meet the requirements are allowed to participate.
With that said, a lot of investors wonder if they can meet those requirements, become an accredited investor, and join in on exclusive investment opportunities.
Accredited investors are able to invest in unregulated securities offerings, including those that are considered risky. With their advanced investing knowledge and the safety net provided by their financial status, they are better able to handle all the risks associated with these securities. 
Thanks to their annual income and net worth, accredited investors can access investment opportunities that are not available to all retail investors. The US Securities and Exchange Commission (SEC) restricts these investments to protect regular people from these riskier investment vehicles. Non-accredited investors do not have a financial cushion to fall back on in case an investment does not work out. 
This does not imply that all early-stage startup companies and hedge funds will lose money. However, they are considered inherently riskier because they are only required to provide basic information to their investors. 
Accredited investors go for these investments, not only to diversify their investment portfolio but in hopes of reaping greater rewards. These investments are particularly attractive to experienced investors. Having the accredited investor status means you have enough investing experience to know what you are doing.
Today we will be exploring the accredited investor concept, look into its definition, and find out what assets count when verifying the accredited investor status.
Assets that Count Toward Accredited Investor Levels
While there is no official accreditation process for accredited investors, those who fit the SEC definition can participate in exclusive investments.
According to the SEC, an accredited investor is someone who has an annual income of at least $200,000. They may also have a joint income of $300,000 with their spouse. This must be the investor’s level of income for at least two years, with a reasonable expectation that they will earn the same amount in the current year. 
A net worth calculation can also be used to determine accredited investor status. An investor with a net worth of $1 million or more, either individually or with their spouse, may be considered accredited. 
However, the value of the person’s primary residence has to be excluded from the net worth calculation. Before the passage of the Dodd-Frank Act in 2010, the value of the residence was included in the process of determining net worth. 
Investors who are considered “knowledgeable employees” of certain investment funds are also considered accredited. Individuals who hold Series 7, Series 65, or Series 82 FINRA certifications and are in good standing can also qualify as accredited investors. 
On August 2020, the SEC amended the definition so that more people could be classified as accredited investors. They announced through a press release that people with certain certifications, credentials, and designations would be considered accredited investors. This is on top of the existing income and net worth tests. 
The amended definition now includes governmental bodies, Indian tribes, and even entities that “own” investments as defined in Rule 2a51-1(b) under the Investment Company Act, in excess of $5 million. The fund or entity must be organized under the laws of foreign countries but not for the specific purpose of investing in the available securities. 
Limited liability companies (LLC) with $5 million in assets are now also qualified as accredited investors.
The SEC has also added the term “spousal equivalent” for those who are not married but meet the other financial qualifications of an accredited investor.
How to Become an Accredited Investor
Despite the rigid criteria for becoming an accredited investor, there is actually no federal verification process that investors have to go through in order to become accredited. The burden of proving that an investor is qualified for certain securities offerings falls on the investment vehicle itself. The company offering the securities will have to verify the status of prospective investors before allowing them to invest. 
Accredited investments usually require investors to fill up a questionnaire and provide certain documentations that prove their net worth or annual income. They may be asked for financial statements, tax returns, proof of securities licensing or employment, etc.
How to Calculate Your Net Worth
If you think you may qualify for prospective investment opportunities that are exclusive to accredited investors, you may want to calculate your net worth. It is not specifically about the assets you own, but whether or not your net worth is over $1 million, when excluding your primary residence.
To calculate your net worth, simply add all of your assets and subtract all liabilities. You also have to exclude your mortgage or loan on said primary residence. Keep in mind that if the loan on your primary residence is more than its estimated fair market value, then it counts as a liability and has to be included in the calculation. 
Advantages and Disadvantages of Being an Accredited Investor
Being an accredited investor has its pros and cons. The main benefit of qualifying as an accredited investor is having access to potentially lucrative investment opportunities that are not available to those with less wealth. It gives unique opportunities to grow your wealth and diversify your investment portfolio within a shorter period of time.
Hedge funds are a great example of this. Hedge funds require high minimum investment amounts. But most accredited investors go for hedge funds despite the higher risks involved because of the exceptional potential returns. 
With more options, accredited investors are able to locate higher yield investments. They can even invest in small businesses, startups, and businesses that are still in development.
In terms of diversification, accredited investors do not have to rely on public markets because they can easily find alternative investments and assets.
There are barely any disadvantages to becoming an accredited investor. It really just gives you access to more investment opportunities. If there is any, it’s the fact that a lot of these unregistered and illiquid securities can be riskier than your usual investment vehicles.
But accredited investors have the financial safety net and the investing knowledge to properly navigate these risks. They can make informed financial decisions because they are considered financially sophisticated.
For this same reason, these securities are inaccessible to regular investors because they cannot afford to lose a few hundred thousand or even a few million dollars. This is something accredited investors often do. But with their net worth and annual income, they can survive such an event.
Accredited investments also have a long capital lock up time, which means you cannot access your money for as long as the deal is in place. Your money may be locked up for a year, up to several years. This means accredited investors cannot just pull their money out any time they want. Being an accredited investor means you have to get used to this level of illiquidity.
How Much Can an Accredited Investor Invest?
Because accredited investors are typically wealthy individuals, they are able to invest in hedge funds, venture capital funds, private funds, etc.
There is no particular limit to how much an accredited investor is allowed to invest since they are using their own capital.
With that in mind, some funds may have their own limitations when it comes to investment amounts that they will accept from individual investors. 
Investment Opportunity for Accredited Investors: Multifamily Syndication
Real estate syndication is one of the investment strategies that are exclusive to accredited investors. It is the perfect investment vehicle during times of economic uncertainty because even in a recession, people need a place to live.
Multifamily properties in particular are very lucrative because they can provide a strong and steady cash flow. But as most investors know, real estate is expensive and owning even a single-family property takes a lot of hard work. Owning and managing an apartment building or a condominium is even more challenging. That is the kind of problem that real estate syndication solves.
If you are an accredited investor and want to get into real estate investing but don’t want the hassle of being a landlord, real estate syndication is the right investment for you.
In a syndication deal, a syndicator or general partner locates the real estate property, secures the loan, and looks for investors who will participate. The investors will pool their resources together to supply most of the capital needed to acquire the property. While a syndication deal can be done for any type of real estate property, multifamily syndication is the most popular because it can produce consistent cash flow. 
With a multifamily property, you don’t have to worry as much about vacancies because there are many units that generate income through monthly rent. Multifamily properties are also generally more expensive, which makes them more difficult for lone investors to acquire. A multifamily syndication deal makes it possible for them to participate in real estate investing without putting in as much money.
Aside from putting the deal together, the syndicator is also in charge of property management. This makes it a true passive investment. Accredited investors don’t have to worry about collecting rent, managing tenants, handling emergencies, paying for repairs, etc. 
The syndicator can either handle these tasks on their own or hire a third party property management company. In any case, passive investors don’t have to play the role of landlord. In return for their contribution, passive investors can earn equity and a share of the monthly cash flow, depending on the fund structure.
Work with BAM Capital for Multifamily Syndication
Accredited investors have access to some amazing investment opportunities. If you are interested in multifamily syndication, you should work with the best. BAM Capital is a syndicator with a strong Midwest focus and a consistent track record.
This Indianapolis-based syndicator prioritizes Class B++, A-, and A+ multifamily assets with in-place cash flow and proven upside potential. 
Known for its unmatched real estate expertise and transparency, BAM Capital aims to mitigate investor risk and create forced appreciation. BAM Capital locates high-quality real estate opportunities and negotiates financing on behalf of accredited investors.
BAM Capital takes care of everything from start to finish. In fact, they currently have over $700 million AUM and 5,000+ units. 
No investment is without risk. Make sure to consult your investment advisor or speak to a BAM Capital investment team member before making any financial decisions. Accredited investors can schedule a call with BAM Capital and invest today.