What is an Accredited Investor?
As a long-time real estate practitioner, I’ve learned a few things over the years. If I can help just one person by sharing ideas and lessons learned, then this format will be worthwhile. Some have resulted from the joy of success, while others were learned the hard way. I promise to be transparent and not hold back. Sharing is how I choose to start my week.
April 14, 2026
What is an Accredited Investor?
An accredited investor refers to an individual who has met certain financial requirements provided in Rule 506(c) of Regulation D administered by the United States Securities and Exchange Commission (SEC). They are allowed to purchase securities that aren’t available to other investors which haven’t been registered with a regulatory authority. The SEC provides an exemption to certain securities that the issuer plans to sell only to accredited investors. Since these securities are unregistered, the issuer must verify that potential investors meet the requirements set by the SEC.
Accredited Investors are typically high-net-worth individuals. The definition of an accredited investor is found in Rule 501 and includes an individual whose annual income is over $200,000 (or $300,000 with a spouse/partner) for the last two years, and a net worth exceeding $1,000,000, excluding the value of their primary residence. Verification is provided by a Letter of Accreditation usually issued by a CPA, an attorney, or an accreditation service. The process is not overly onerous and can be verified in as little as 15 minutes.
The equity portion of many real estate projects are funded through 506(c) offerings. It is important that the investment documentation (including a Partnership Agreement and a Private Placement Memorandum) are prepared by a syndication attorney. These documents explain the project, the role of the operators (usually referred to as General Partners), the role of the passive investors (usually referred to as Limited Partners), and the potential risks associated with projects of this nature. The investor must agree to and sign the documentation before their investment can be funded. This is for everyone’s protection.
The real estate projects developed by Founders Development Company are offered to accredited investors and adhere to the stringent regulations provided in Rule 506(c). As such, we are very familiar with this process. If you have questions or need assistance with accreditation, please feel free to reach out to me.
