Accredited Investment Opportunities and Investments Open to Non-Accredited Investors, too
The world of investing is already diverse: all you must do is build a portfolio with a mix of asset classes, and you’re well on your way to meeting your financial goals… right? Maybe not. There are a multitude of new investment opportunities popping up, including many accredited investor opportunities.
Some of the accredited-investors-only opportunities have the potential to both diversify your investment portfolio and provide growth. With the increased number of such opportunities, becoming this kind of investor opens a new door to your investment possibilities.
This article gives you insight into how to find investments for accredited investors, or qualified investors, and whether these opportunities might be for you. Many of the accredited investor platforms, also include opportunities for non-accredited individuals as well. You’ll find many platforms to explore and opportunities to diversify your investing beyond typical stocks and bonds.
Going Beyond Passive Investing
Some are content with a “lazy,” automated portfolio. However, other investors are seeking a way to go beyond the publicly available stocks and bonds. These investors crave more diversification and are willing to take greater financial risks in pursuit of higher returns.
Contents
- Accredited Investment Opportunities and Investments Open to Non-Accredited Investors, too
- What are Accredited Investors?
- What are the Benefits of Being an Accredited Investor?
- 15 Accredited Investor Opportunities
- 1. Groundfloor – Invest in Real Estate Debt
- 2. EquityMultiple – Commercial Real Estate Investments
- 3. FarmTogether – Invest in Farmland
- 4. Crowdstreet
- 5. AcreTrader– Invest in Farmland
- 6. Cryptocurrencies
- 7. RealtyMogul – Invest in Commercial and Residential Real Estate
- 8. StartEngine (acquired SeedInvest) – Invest in Startups
- 9. PeerStreet – Invest in Real Estate Debt
- 10. Diversyfund – Invest in Rental Properties and More
- 11. Percent – Invest in Private Credit Investment
- 12. FundersClub – Venture Capital Investments
- 13. YieldStreet– Invest in Financial Securities in Real Estate, Art Finance & More
- 14. Cadre Data – Driven CRE Investing
- 15. First National Realty Partners (FNRP) – Invest in Grocery-Anchored Commercial Real Estate
- Pros and Cons of Accredited Investing
- Accredited Investing Sites Wrap Up
- FAQ
- Related
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If you want to go beyond the public stock and bond exchanges, you can gain access to diverse, private investment opportunities open to accredited and non-accredited investors as well. Read on to learn about various niche investment opportunities and to find out if you qualify for the accredited investor opportunities and !
What are Accredited Investors?
Accredited investors are have more investment opportunities than your average investor.
Due to their assets or income, accredited investors can make “private placement” investments, which are investments available only to investors who have been pre-selected; these private placement investments are not available to the general public. Private placement investments don’t trade publicly, like stocks on the NYSE or Nasdaq, but in private markets.
What gives accredited investors this special designation is a combination of two key features: their perceived knowledge about riskier investment transactions and their net worth, income, or both.
These wealthier investors “qualify” for certain investments because they can afford to lose money without destroying all their finances. Also, these wealthier individuals are expected to be able to understand the risks involved in private placements, startups and crowdfunding offers.
Accredited Investor Qualifications
Historically, one could only become an accredited investor if one of the following criteria was met:
- Have an annual income over $200,000 for the past two years, or $300,000 in joint income if married; you must also reasonably expect a similar income in the current year.
- Have a net worth greater than $1 million; this amount stays the same for both an individual and a couple. Primary residences are not included in this total.
- Be a private business or other organization with assets greater than $5 million or have accredited investors as equity owners.
New Category of Accredited Investors
There may be good news for those who want to become accredited investors but do not yet meet the above income or net worth qualifications.
The qualifications to become an accredited investor have recently been loosened. The Securities and Exchange Commission, or SEC, amended the accredited investor requirements in August 2020. Now, a wider range of people can invest in private placement investments.
The new category of accredited investors includes certifications like licensed securities representatives (Series 7) and licensed investment advisors (Series 65). Knowledgeable employees also qualify as accredited investors. Additional members include family offices, registered investment advisors, and several related classes.
Even under these new regulations, accredited investors must be knowledgeable enough to understand and accept the risk of investing in a private placement.
What are the Benefits of Being an Accredited Investor?
Accredited investors can access many types of available investments, not readily available in the public markets.
Potential benefits of accredited investments:
Greater Portfolio Diversity
Your non-accredited peers are limited in their investments; they can only invest in what is available on the public market. Accredited investors, on the other hand, can diversify their portfolios with unique offerings, unavailable to the general public. These investments are also not generally regulated by the SEC, so they may offer more diverse investing opportunities than those available on the open market.
Due diligence is required as these are generally considered speculative investments.
(Potential for) Higher Returns
Since private placements are so selective about their investors, they are often able to offer higher yields, along with requiring greater minimums. These investments might include higher yield (and higher risk) opportunities, like real estate and venture capital funds.
Investing With Your Values
Although socially-responsible investment options are available to the general public, accredited investors can take it one step further by investing in start-up businesses and impact investments. Whether you’re simply excited to support developing businesses, or specifically target businesses in a niche you care about, accredited investor-only opportunities are bound to be available.
15 Accredited Investor Opportunities
The following 15 opportunities offer a glimpse into a range of alternative investment platforms at various price points.
Bonus: some of these opportunities are available to non-accredited investors as well!
1. Groundfloor – Invest in Real Estate Debt
Accredited and non-accredited investors.
Minimum investment: $10
Investors interested in investing in real estate debt will find Groundfloor appealing. Rather than purchasing and managing properties outright, Groundfloor clients put money directly into mortgage notes.
Also, instead of using a traditional bank, would-be borrowers apply for a loan through Groundfloor; these borrowers are ranked according to their credit worthiness, and investors can choose what level of risk they feel comfortable with. Groundfloor reports an average of 10% returns on 6-12 month terms, though the riskiest loans can yield up to 26%.
Groundfloor also offers the opportunity to receive your initial investment returned within 2 years. A much shorter “lock up” period than competitors.
2. EquityMultiple – Commercial Real Estate Investments
Accredited investors.
Minimum investment: $5,000
EquityMultiple is a crowdfunded real estate opportunity and they offer commercial, industrial, and residential real estate investments nationwide.
EquityMultiple offers investors debt, similar to Groundfloor, and private equity funds. The $5,000 minimum is more affordable than buying a rental property outright. They also offer Opportunity Zone investments, which provide tax benefits in exchange for investing in underinvested communities.
3. FarmTogether – Invest in Farmland
Accredited investors.
Minimum investment: $15,000
FarmTogether is exactly like it sounds, an investment platform that lets you invest in agriculture. If you’re seeking a way to diversify into farming land, FarmTogether might be the solution.
The team responsible for choosing properties at FarmTogether aims for opportunities they believe can produce 6-13% returns. Investing in farmland provides a unique diversification opportunity for qualified investors. While the population grows, the available farmland doesn’t, providing a sweet spot with growing demand and stable supply. Ultimately, this situation will likely lead to higher revenue for owners of farmland.
4. Crowdstreet
Accredited investors.
Minimum investment: $25,000
Crowdstreet is akin to a real estate supermarket of institutional-quality investments. The platform won the 2022 Investopedia award for the best overall crowdfunding site. It also offers online tools to manage investments. Investors have committed more than $2.8 billion to over 580 projects.
The investment opportunities at Crowdstreet include individual deals like hotels, apartments, and commercial real estate. Crowdstreet also offers private equity real estate funds, like real estate investment trusts (REITs), Rainbow Cannabis Fund II, and the Growth Market Multifamily fund.
Investors who commit more than $250,000 can have Crowdstreet create a custom investment strategy with ongoing management.
5. AcreTrader– Invest in Farmland
Accredited investors
Minimum investment varies per offer: $10,000 – $25,000
Investing in land is prudent, as they’re not making any more of it. AcreTrade is a crowdfunding farmland real estate investing platform with a variety of farms.
Unlike its counterparts that deal with residential and commercial real estate, AcreTrader deals specifically with farmland. The lock up period ranges from five to 10 years, depending upon the farm.
You can earn money in two ways on this platform: land value appreciation and farmer’s rent payments. The first option is realized after the property’s sale, and the investment is dissolved. On the other hand, the second one is paid annually, in December. Like other alternative asset classes, you’ll receive returns that are more stable and less correlated with other assets.
Although the platform has limited offerings, it has rigorous underwriting and due diligence process for all its properties. Also, you can choose between taxable brokerage accounts and self-directed IRA accounts (SDIRAs).
6. Cryptocurrencies
Accredited and non-accredited investors
Minimum investment: $5-$10
Cryptocurrency is an investment class all on its own, with a collective market capitalization of about $2 trillion in the past 10 years.
This new asset class is growing rapidly in popularity, and might be suitable for those who can tolerate its extreme price volatility. In Novermber 2021, Bitcoin, at its peak, topped $60,000 per coin, from a low of $6,300 in March 2020. We include cryptocurrency in an article for accredited investors is due to the asset class’ high price volatility and risk.
Due to the popularity of crypto investing, there are a range of digital coin investment platforms and apps from Coindesk to smaller diversified apps like M1 Finance and Robinhood.
7. RealtyMogul – Invest in Commercial and Residential Real Estate
Accredited and non-accredited investors
Minimum investment: $5,000
RealtyMogul is one of the biggest and oldest private real estate investing platforms with a variety of offers. The company is a digital real estate crowdfunding marketplace for commercial and private real estate assets and caters to investors seeking institutional quality real estate investments.
The RealtyMogul Income REIT provides high yield monthly cash flow, secured by real property.
The platform offers private placements (private real estate of at least 2 parties) for accredited investors and two private REITs for the non-accredited lot. If you wish to invest in private placement opportunities, you can do so through group properties or fractional ownership in an individual property. If you want to go the REIT path, you have the Income REIT (1% annual management fee) and the Apartment Growth (1.25% annual management fee) options.
8. StartEngine (acquired SeedInvest) – Invest in Startups
Accredited investors and non-accredited investors..
Minimum investment: $200
If you like the thrill of investing in startups, StartEngine might be for you. They offer startups in various fields, from high-tech companies to healthcare. StartEngine heavily vets all startups that apply, and they accept only approximately 1% of the applicants. In addition to investing in start up ventures, there is a “collectibles” vertical with opportunities to buy and sell blue chip art, wine, sports cards, comic books, watches, collectible coins, NFTs, and more
Unlike the previous accredited investments, SartEngine isn’t backed by real property. In addition to available investments, they list upcoming startups so that investors can keep their eyes on the market as it develops.
9. PeerStreet – Invest in Real Estate Debt
Accredited investors.
Minimum investment: $100
When you invest with PeerStreet, your money funds real estate loans nationwide. This platform offers fixed income returns and flexible terms, which gives investors an opportunity to customize their investments as they diversify their portfolios. Essentially, investors are replacing a traditional bank in the mortgage process; investors put money toward a borrower’s loan, then earn money on their investments as borrowers pay that money back with interest.
Investors can customize their loan portfolio and apply this minimum to multiple properties.
10. Diversyfund – Invest in Rental Properties and More
Accredited and non-accredited investors.
Minimum investment: $500
The platform offers investors a way to invest in the real estate market without requiring the massive up-front costs and potential ongoing headaches associated with purchasing rental or “fixer-upper” flipping properties.
Diversyfund is a crowdfunding platform, so initial investments are more than reasonable. Diversyfund buys, renovates, and resells apartment buildings.
Essentially, Diversyfund lets you reap the benefits of rental properties without any work required of a landlord.
11. Percent – Invest in Private Credit Investment
Accredited and investors.
Minimum investment: $500
Percent offers retail accredited investors opportunities to access various non-bank lending or private credit deals. They use their innovative tools and comprehensive market data to give you a clear view of these private credits.
You can earn high returns through lending – just like bankers and institutions.
As a result, you can make better informed decisions, source and compare investment options, and easily monitor their performance, all on the Percent Network.
The most attractive feature of this alternative investment platform is the short-term, higher-yielding debt. The investment returns are less correlated with other asset types. They offer short-term debt investments of many durations, beginning with one-month up to several years. The platform targeted annual returns on unsecured notes range from 10-15% on average.
12. FundersClub – Venture Capital Investments
Accredited investors.
Minimum investment: $3,000
FundersClub offers accredited investor venture capital investments. They vet all startups carefully, and they fund less than 2%; this makes the offerings quite competitive.
Something unique FundersClub offers is the ability to get involved with the companies you are funding; far from passive investing, clients can get involved in hiring, networking, and even sharing expertise with the startups they have funded.
Clients can start investing $3,000 for single-company funds or $10,000 for multi-company funds.
13. YieldStreet– Invest in Financial Securities in Real Estate, Art Finance & More
Accredited and non-accredited investors
Minimum investment: $10,000
Yieldstreet is among the alternative investments platforms providing passive income to investors. The platform gives you access to income-generating assets across various asset classes. Also, its opportunities for accredited and non-accredited investors are backed by collateral. Yieldstreet states that its assets typically have low-stock market correlation.
The platform offers funds and individual offerings from the following asset classes; short and long term real estate debt, art, legal, and real property.
Moreover, the platform offers predetermined cash flow payment schedules – monthly or quarterly. Lock up periods range from three months to four years. Alternatively, the firm may pay interest and principal following certain events.
14. Cadre Data – Driven CRE Investing
Accredited investors.
Minimum investment: $25,000
Commercial real estate investing with an opportunity to invest in institutional-quality real estate investments. The deals range from funds to multifamily, industrial and mixed use. The offers span the U.S. with many offers in growing markets like Nashville and Orlando.
Since its commencement in 2014, the firm has transacted nearly $4.0B in the accredited investor marketplace for CRE. The company’s investment committee has highly experienced (over 25 years on average) members from Blackstone, Goldman, Vornado, and the Four Seasons Hotel & Resorts.
Cadre Data’s expertise and market position earns it backing from Goldman Sachs, Andreessen Horowitz, and Harvard’s endowment fund. The firm is committed to each deal in its entire lifecycle as it maintains co-investment for every deal they handle.
15. First National Realty Partners (FNRP) – Invest in Grocery-Anchored Commercial Real Estate
Accredited investors
Minimum investment: $50,000
FNRP is a US-Based fast-growing, vertical integrated commercial real estate (CRE) investment firm that mainly focuses on the grocery-anchored niche. First National also offers investments in multi-family communities and industrial parks.
The team draws credit from its relationship with top-ranking national-brand tenants such as Whole Foods, Walmart, and Kroger. They give their clients institutional-quality on-and-off markets CRE deals.
The crowdfunding platform has helped many investors to boost their net worth and diversify their portfolios against market volatility through their steady cash-flow-yielding deals.
Unlike the traditional REIT or fund, FNRP allows you to pick the deal that best suits your investment goals. Hence, you can use your offerings to create your portfolio.
Pros and Cons of Accredited Investing
There are many benefits to the unique investments available to accredited investors, but there are also disadvantages. Weighing these pros and cons all boils down to whether you are willing to take risks for potential high-return investments.
Pros
- Potential for high returns, particularly on higher-risk investments
- Avoiding the stock market through private placement investments
- Increased portfolio diversity
Cons
- Higher risk investments
- Many lack SEC regulation and require greater due diligence
- Minimum investments tend to be more expensive
- Potential for additional tax-time considerations
- Investments tend to be illiquid and tie up your money for several years
Accredited Investing Sites Wrap Up
There is a lot to be said for the benefits of becoming an accredited investor and private placement opportunities. There’s the thrill and possibility of high returns on investment in exchange for greater risk; these investments also boost portfolio diversification by giving accredited investors access to opportunities few others have.
The diversification might counteract loses should the stock market decline.
Accredited investors will also have a chance to buy private placements that do not have the same volatility as the stock market. On the other hand, if a business or real estate loan fails, you might lose a large portion of your financial commitment.
The investors must do their due diligence because the SEC regulations might not apply.
Accredited investors must also ensure that their private placement investments are reported correctly come tax season.
Finally, accredited investors will typically, although not always, need to make more significant minimum investments than they would with more traditional investments. It’s important to understand the fee structure of the investment as well.
These risks are precisely why private placements are limited to accredited investors. This class of investors is assumed to have enough knowledge to make informed decisions about riskier investments. They also possess the capital to take a considerable loss if an investment goes awry.
Whether you’re an accredited investor or not, a well-rounded portfolio is one of the best ways to mitigate risk. The 15 accredited investor opportunities discussed above are just a few ways you can diversify your portfolios and increase your wealth-building opportunities.
FAQ
A qualified investor is similar, but not the same as an accredited investor. They both need to meet income, net worth, or investment qualifications. Also, each category is eligible for specific categories of investment opportunities. A qualified investor must have a $5 million investment portfolio. While an accredited investor can have a $1 million net worth, or expertise within the investment realm, or $300 annual income joint) or $200,000 (individual).
One qualification to become an accredited investor, you must earn more than $200,000 or $300,000 if filing a joint tax return. So, you could get a high paying job and become an accredited investor. Or, you can save, invest, and grow your net worth to become a millionaire. Or, you can study and take the series 7 securities license test and work in in the financial industry.
You can invest in private placements and a wide variety of startups, crowdfunding and other businesses that aren’t registered with the SEC. But, just because you can, doesn’t mean you should. Accredited investments are speculative and aren’t suitable for conservative investors.
Accredited investors might earn higher returns. A significant benefit of being an accredited investor is a potential to earn increased returns, ideally more than 8%. Along with the possibility for higher returns, accredited investors are typically involved in riskier investment products. On occasion, there are accredited investor deals that have more significant risks with returns north of 15%.
You can meet accredited investors on the internet or in local meetups. Several online directories, like the Angel Capital Association and the Angel Investment Network, have lists of accredited investors. Alternatively, you can attend investor events to find and network with potential angel or wealthier investors.
Yes, there is a loophole to becoming an accredited investor. Since there’s no formal vetting process, any person can claim to be an accredited investor under Rule 506(b). Hence, unregistered securities issuers should conduct investors’ background checks.
Related
The Financial Planning Process – Steps to Wealth
7 Steps to Becoming a Millionaire – at Any Age
How to Calculate Net Worth – What are You Worth?
FarmTogether vs Acretrader – Invest in Farmland
10 Best Alternative Investments
Disclosure: Please note that this article may contain affiliate links which means that – at zero cost to you – I might earn a commission if you sign up or buy through the affiliate link. That said, I never recommend anything I don’t personally believe is valuable.
