If you’ve spent any time looking into real estate syndications, private equity, or other alternative investments, you’ve probably come across the term accredited investor. It sounds official, maybe even intimidating. But here’s the thing: whether or not you meet the definition can have a major impact on what kinds of investment opportunities you’re allowed to participate in.

This isn’t just a bureaucratic label. It’s a feature flag. And on the other side of that flag? Some of the most interesting investment opportunities available today.

Let’s unpack what it means to be an accredited investor, why it matters, and what to do if you’re not quite there yet.

Why It Matters

Some investment opportunities are only open to accredited investors. That’s not a marketing gimmick. It’s a legal requirement.

Under SEC regulations, certain private offerings, like those under Rule 506(c) (we’ll touch up on that a bit later in this article), are only available to people who meet the accredited investor criteria. These investments are allowed to skip the usual regulatory hurdles that public investments go through; but in exchange, the SEC wants to make sure that participants can bear the risk.

That matters if you’re looking at things like:

  • Real estate syndications that are publicly advertised
  • Private equity or venture capital funds
  • Hedge funds
  • Certain crowdfunding deals

These aren’t the kinds of deals you’ll find on Robinhood or Vanguard. They’re often more niche, sometimes higher risk, and can come with more upside. But you can’t even get in the door if you’re not accredited.

So if you’ve ever seen a compelling investment opportunity and were told you couldn’t participate because of SEC rules, chances are this was the reason.

What Is an Accredited Investor?

The term accredited investor might sound like something you need to apply for, pass a test, or get certified by the government, but it’s not like that. It’s simply a definition created by the SEC to decide who can participate in certain kinds of private investments.

There are a few ways to qualify, and you only need to meet one of them:

If you’re investing as an individual (single):

  • You’ve earned $200,000 or more in income for each of the past two years, and you reasonably expect to earn at least that much this year.
    or
  • You have a net worth over $1 million (either alone or with your spouse) excluding the value of your primary residence.

If you’re investing jointly with a spouse:

  • Your combined income is $300,000 or more for each of the past two years, with the same reasonable expectation going forward.

If you’re investing through an entity (like an LLC or trust):

  • The entity has over $5 million in assets.
    or
  • Every owner of the entity qualifies as an accredited investor individually.

That’s it. There’s no badge, no formal application, and no special bootcamp. But when it comes time to invest in something like a 506(c) syndication, you’ll be asked to prove that you meet the criteria. Some deals let you self-certify. Others require third-party verification (but more on that later).

Syndications: 506(b) vs 506(c)

Most real estate syndications fall under something called Regulation D, which is part of the SEC’s framework for private offerings. Within that, there are two common flavors: 506(b) and 506(c). Both are legal ways to raise capital from investors, but they come with different rules around who can invest and how.

506(b): The “friends and family” route

This exemption allows sponsors to raise money from up to 35 non-accredited investors, as long as they have what’s called a substantive pre-existing relationship with those investors. That means no public advertising. Deals are shared quietly, usually among people who already know the sponsor.
If you’re not accredited, this is often your way in. But it only works if:

  • You already have a relationship with the sponsor, and
  • The sponsor is choosing to raise under a 506(b) exemption.

506(c): The public route, but only for accredited investors

This exemption is different. It allows public advertising. That’s why you see sponsors talking about their deals online, on podcasts, or even on LinkedIn.
But there’s a tradeoff: only accredited investors can participate, and the sponsor is legally required to verify your status through documentation (like tax returns, W-2s, or a letter from a CPA or attorney).

That means if a deal is marketed publicly, you won’t be able to invest unless you’ve crossed that accredited threshold and can prove it.

So does it matter for syndications?

Absolutely. If you’re not accredited, your access is limited to private, relationship-based 506(b) deals. And those are getting harder to find, especially if you’re newer to the space. Most sponsors raising capital at scale lean on 506(c) because it gives them more reach and fewer limitations.

If you’re already accredited, great! You’re in a position to see and act on more deals. If you’re not there yet, don’t worry. You’re not shut out entirely, and we vet these types of deals as well. But you’ll need to be more intentional about building relationships and staying plugged in.

How Do I Know If I Qualify?

Knowing the criteria is one thing. But when it comes time to actually invest, you’ll need to prove you meet them, especially in a 506(c) deal.

There are two common ways to do that:

1. Self-Certification (Only for 506(b) deals)

If you’re investing in a 506(b) syndication, you’ll usually just sign a disclosure saying you’re accredited (if you are). No one’s asking for your tax returns. It’s built on trust and a pre-existing relationship.

But again, this only applies to 506(b). The moment you look at a publicly marketed deal, self-certification won’t cut it.

2. Third-Party Verification (Required for 506(c) deals)

For 506(c) investments, sponsors are legally required to verify your status. That means you’ll need one of the following:

  • A letter from a CPA, attorney, or registered investment advisor confirming your accredited status
  • Income documentation (e.g. W-2s, tax returns)
  • Net worth documentation (bank statements, investment accounts, liabilities)

Some platforms and services make this easier by providing accreditation letters for a fee. Others build it into their onboarding process.

If that sounds invasive, yes, it can be. But once you’ve been verified, most sponsors will accept that letter for several months. Some platforms let you reuse it across multiple deals.

What If I’m Not Accredited Yet?

Not being accredited doesn’t mean you’re out of the game. It just means you’ll need to approach things a little differently.

Start Building Toward It

If you’re close to the income or net worth threshold, this might just be a timing issue. Keep growing your income, saving, and investing. Being intentional about your financial trajectory now can open more doors later.

Remember: it’s not about what you owe or what your assets could be worth someday. Net worth for accreditation is measured in hard numbers (assets minus liabilities), not future potential.

In the Meantime: Focus on 506(b)

Plenty of great deals are still structured as 506(b) offerings. The key is access. And you can certainly find that access with us.

Sponsors aren’t allowed to advertise 506(b) deals publicly. So your path in is through building relationships early, well before a deal ever launches. Join investor lists, attend webinars, have real conversations with operators. Once that relationship is in place, you can be considered for 506(b) deals even if you’re not accredited yet.

Explore Other Investment Paths

Not every alternative investment requires accreditation. There are crowdfunding platforms and real estate funds that accept non-accredited investors. The terms may be different, but they can still be solid vehicles to grow your wealth while you work toward full access.

Final Thoughts

Being an accredited investor isn’t about status, it’s about access. Once you cross that line, an entire category of investment opportunities opens up. But even if you’re not quite there yet, you can still take smart, intentional steps to grow your portfolio and position yourself for long-term success.

If you’re curious about where you stand, or you want help getting connected to opportunities that fit, you don’t have to figure it out alone. Reach out to us today and we’ll begin navigating your journey together!