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Quick Guide: Creating & Preserving WEALTH while investing passively in real estate development Ebook
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No. Non accredited investors can also invest in syndications, though there are more opportunities for accredited investors. To invest as a non-accredited investor, fill out this form and we’ll be in touch.
An accredited investor, in the context of a natural person, includes anyone who:
Has 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).
On the income test, the person must satisfy the thresholds for the three years consistently either alone or with a spouse, and cannot, for example, satisfy one year based on individual income and the next two years based on joint income with a spouse. The only exception is if a person is married within this period, in which case the person may satisfy the threshold based on joint income for the years during which the person was married and based on individual income for the other years.
In addition, entities such as banks, partnerships, corporations, nonprofits, and trusts may be accredited investors. Of the entities that would be considered accredited investors and depending on your circumstances, the following may be relevant to you:
Any trust, with total assets in excess of $5 million, not formed to specifically purchase the subject securities, whose purchase is directed by a sophisticated person, OR
Any entity in which all the equity owners are accredited investors.
The minimum investment amount varies by deal, but it’s typically $50,000. On more expensive properties, the minimum investment amount may be higher.
You can invest with your retirement funds if they are in a self-directed account such as a self-directed individual retirement account (SDIRA) or Solo 401(k). For more information, fill out this form and we’ll be in touch.
Real estate investments are very tax-friendly, primarily because they can take advantage of depreciation which can result in a “paper” loss on your investment statement even if you’ve earned significant returns. In some cases, this paper loss can also offset other investment gains or even your personal income on your tax returns. You should discuss your personal situation with a qualified tax professional.
As a partner in the LLC that purchases the properties, you will receive a K-1. A K-1 is a tax form used by partnerships to provide investors with detailed information on their share of a partnership’s taxable income. Partnerships are generally not subject to federal or state income tax, but instead issue a K-1 to each investor to report his or her share of the partnership’s income, gains, losses, deductions, and credits. The K-1s are provided to investors on an annual basis so that each investor can include K-1 amounts on his or her tax return.