Interested in passive real estate investments as a non-accredited investor but don’t know where to start?

Or maybe you’ve encountered restrictions around being an accredited investor but still want to get the amazing returns of passive real estate income.

The good news is you don’t need to be accredited to benefit from real estate investing. Plenty of great funds and platforms allow a non-accredited investor to participate. In this article, I’ll clarify the difference between the categories and how you can get started.

Investing in real estate is one of the most profitable ways to increase your income or net worth. And even better: passive real estate investing.

The great thing about passive real estate investing is that all you have to do is provide the funding. You can avoid managing tenants and all the other headaches of owning property yourself.

It’s also a great way to diversify across different types of investments in different parts of the world. In short, the passive income options we’ve identified here are better for your portfolio than owning just a single family rental.

Are you ready to learn how non-accredited investors can get in on the passive real estate action?

TL;DR

  • Real estate is a profitable avenue for increasing income or net worth.
  • Passive real estate investing entails providing funding without managing tenants.
  • Non-accredited investors, in earlier net worth stages, explore investment choices.

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Accredited vs. Non-Accredited Investor

First, let’s define what accredited investors and non-accredited investors are.

The primary difference between an accredited and non-accredited investor is how the Securities and Exchange Commission (SEC) defines the rules around income, net worth, and investment experience.

Accredited Investors

what is an accredited investor?

Accredited investors are high-net-worth individuals and institutions like banks, insurance companies, brokers, and trusts, known for their robust asset management capabilities. The SEC’s criteria for accredited investor status include certain income and net worth requirements and professional knowledge in equity investments or private funds.

The criteria for being an accredited investor include:

  1. Income Requirements:  The SEC requires that you have had an annual income of over $200,000 (or $300,000 if joined with a spouse) for the past two years, plus the expectation of maintaining or exceeding that income in the current year.

  2. Net Worth Requirements: To qualify, your net worth should surpass $1 million, either personally or jointly with your spouse, excluding the value of your primary residence.

  3. Professional Knowledge: Directors, executive officers, or general partners of the company selling the securities (real estate investment) are also counted as accredited individuals.

Non-Accredited Investors

non-accredited investor

A non-accredited investor refers to someone who has not yet met the specific financial criteria required for accredited status. This encompasses investors at earlier stages of building their net worth and investing know-how.

Non-accredited investors, often retail investors or those on their investing journey, may not meet these financial benchmarks. They might explore investment choices like mutual funds, equity crowdfunding, or real estate projects, which don’t always require the substantial funds or fixed income levels accredited investors need.

Investment Opportunities for Non-Accredited Investors

Investment Opportunities for Non-Accredited Investors

If you’re a non-accredited investor trying to get into the real estate market, there are plenty of accessible investment options available.

You can explore indirect investment vehicles like REITs and crowdfunding platforms or even consider owning property directly. There are a number of opportunities out there to suit your investment goals.

Here’s a quick look at some of the more popular options.

  1. Real Estate Investment Trusts (REITs): These are private companies that own, operate, or finance income-generating real estate. They’re a great option for non-accredited investors since they provide exposure to real estate without the hassle of buying property directly. Plus, you can trade REITs on major stock exchanges, so they’re easily accessible and very liquid.

  2. Crowdfunding Platforms: Real estate crowdfunding lets investors come together and pool their money to invest in properties they couldn’t afford on their own. The great thing is some platforms even welcome non-accredited investors, allowing them to invest in bigger projects with smaller amounts of money. As of 2023, the global crowdfunding market size is $1.41 billion, with that number forecast to more than double by 2030. Now is a great time to get in on real estate crowdfunding with less money than buying a property on your own.

  3. Publicly Traded Real Estate Companies: Investing in stocks of companies involved in real estate development, management, or sales can provide non-accredited investors with an opportunity to tap into the real estate market.

  4. Direct Property Ownership: You still have the option to buy residential or commercial property directly. This can involve purchasing rental properties or homes without intending to use them as a primary residence but only to flip them for a profit.

12 Real Estate Platforms for Non-Accredited Investors

real estate platforms for non-accredited investors

The great thing about real estate investing is that you don’t need a ton of money to get going. There are ways for non-accredited investors to get the same real estate investment opportunities as accredited investors.

In the past, the only way to make big bucks in real estate was to have big bucks in the first place to spend.

Today, there are real estate platforms designed specifically for non-accredited investors, providing opportunities to invest in properties and diversify your portfolio.

Here are the top platforms you should take a closer look at:

1. SparkRental Co-Invest Club

SparkRental co-investing club is my first pick if you want to start investing in commercial real estate without needing accredited investor status or tons of capital. Here’s why:

  • Commercial Deals: It’s a pretty cool co-investing club that opens the door for regular folks to put money into commercial deals for as little as 5K.

  • Training: The best part about SparkRental is that it isn’t just about being a silent money partner. They offer training that allows you to learn and grow. Every month you hop on community video calls to peek behind the curtain how to vet a sponsor and value deals. You gain real insight into analyzing things like capitalization rates, rent rolls, and location viability.

Collaborate: Then members collaborate to decide which projects the fund invests in based on risks and returns we want exposure to. So you get to learn the ropes directly from folks doing this day-to-day while your money works hard for you.

  • Pros:

  1. Accessibility for Non-Accredited Investors: Allows individuals who don’t meet the accredited investor criteria to invest in commercial real estate.

  2. Lower Capital Requirement: Offers an entry point into commercial real estate investments with as little as $5,000.

  3. Educational Aspect: Provides monthly community video calls for learning how to vet sponsors and value deals, giving real insight into investment analysis.

  4. Collaborative Decision-Making: Allows members to collaborate on choosing which projects to invest in, based on desired risk and return profiles.

  • Cons:

  1. Limited Control: As a member of a co-investing club, individual investors may have limited control over specific investment choices and management decisions.

  2. Dependence on Fund Management: The success of investments heavily relies on the decisions and expertise of the debt fund managers.

  3. Market Risks: Like all real estate investments, there are inherent market risks, including fluctuations in property values and rental incomes.

2. Concreit

Concreit is a platform that lets users invest in a pool of real estate loans, making real estate more accessible. It’s user-friendly and perfect for beginners looking to get into the game.

  • Pros: It doesn’t require a large investment; even small investors can get in on the action. Plus, you’ve got some options when it comes to liquidity — you can access your funds every week, which is flexible compared to other real estate investments.

  • Cons: You do not own any real estate equity with this. Instead, your earnings are tied to how well the loan portfolio performs, which can go up and down.

3. Arrived Homes

Arrived Homes allows you to invest in shares of rental properties, focusing on single-family homes. This approach makes earning rental income and property appreciation accessible to everyone.

  • Pros: You can directly invest in physical properties, which means you have a tangible asset base. Plus, you can earn both rental income and capital appreciation, giving you two income streams.

  • Cons: Remember that these investments are long-term and not easily convertible to cash, so you’ll need to commit to staying invested for several years. Also, each investment is specific to a particular property, limiting diversification’s benefits.

4. DiversyFund

DiversyFund specializes in multifamily real estate and offers growth REITs to everyday investors, completely free of management fees. Their platform aims to generate wealth by reinvesting cash flows into acquiring more properties.

  • Pros: DiversyFund stands out for its cost-effectiveness, as it doesn’t charge any management fees, making it a good option for investors seeking high returns with low costs from multifamily properties.

  • Cons: Investments in DiversyFund are not easily liquidated, with a minimum 5-year holding period. That means you may need other funds that you have quick access to. Additionally, the company’s focus on multifamily properties may limit exposure to other sectors within the real estate market.

5. Fundrise

Fundrise offers a wide range of real estate investment options, with both REITs and real estate funds in their portfolio. Their goal is to make real estate investing more available and efficient for everyone, even if you’re not an accredited investor.

  • Pros: Fundraise has a low minimum investment threshold, so almost anyone can begin investing in real estate. They also provide a diversified portfolio of real estate investments, which helps spread the risk across different projects.

  • Cons: Investors have less control over specific property investments since they rely on the platform’s choices. Additionally, management and advisory fees are in the fee structure, which adds to the overall investment cost.

6. Groundfloor

Groundfloor is truly one-of-a-kind in terms of offering short-term, high-yield investments in real estate debt. With it, you can invest in individual real estate loans for specific renovation projects.

  • Pros: The low minimum investment threshold makes it accessible, and with the short-term nature of loans, you can expect quicker returns. It also provides a high-yield alternative compared to traditional real estate investments.

  • Cons: Investing in individual loans carries a higher risk, as your returns depend on the success of each specific project. Additionally, the platform requires a deeper understanding of real estate project viability.

7. Landa

Landa specializes in residential real estate, giving users the opportunity to invest in shares of rental apartments. This approach provides a simple way to enter the property investment market, especially in urban residential areas.

  • Pros: The platform’s low entry point makes it accessible to investors with limited capital. Not only does it offer the potential for regular income through monthly rents, but it also allows for property value appreciation, making it a great opportunity for investors looking to grow their wealth in the real estate market.

  • ConsThe selection of properties is limited, which can impact the diversification of your portfolio. The returns on your investments heavily rely on how well the rental market performs.

8. RealtyMogul

RealtyMogul is great for commercial real estate investing opportunities, including retail spaces, office buildings, and large apartment complexes. It’s a platform designed for those seeking to venture into more substantial real estate opportunities.

  • ProsInvesting in commercial real estate has the potential for higher returns than many residential real estate investments. It allows you to access various commercial properties, offering a unique risk-return profile.

  • Cons: Typically, the platform has a higher minimum investment, which can be a problem for smaller investors. Additionally, commercial real estate investments tend to have lower liquidity, which limits the ability to withdraw funds quickly.

9. Roofstock

Roofstock is a good online marketplace to buy and sell single-family rental homes. It makes investing in rental properties easier by offering helpful tools and resources for both buyers and sellers.

  • Pros: With direct ownership of rental properties, investors have complete control over their investments. Roofstock offers comprehensive property management services, making it easier for investors to handle the responsibilities.

  • Cons: Investing in such properties requires a substantial initial capital commitment. However, there are little to no additional challenges and responsibilities when it comes to owning and managing rental properties.

10. Streitwise

Streitwise allows investors to invest in commercial real estate through its REITs. The main goal is to deliver attractive dividend yields by focusing on office and industrial properties.

  • ProsWith its attractive, high dividend payouts, this option becomes appealing to income-seeking investors. Moreover, it offers accessibility to non-accredited investors, making commercial real estate investment more attainable and inclusive.

  • Cons: Since commercial real estate investments are not short-term in nature, long-term commitment is necessary.

11. Titan

Titan is an investment platform that offers managed portfolios. It’s for investors seeking a diversified investment approach that covers real estate.

  • ProsIt provides expertly managed portfolios, relieving you from the pressure of making individual investment decisions. They provide diversified investments across different asset classes, including real estate.

  • Cons: The focus here is on taking a diversified portfolio approach. However, it’s important to note that the platform does charge management fees, which can add to the overall cost of your investment.

12. YieldStreet

YieldStreet opens up alternative investments, like real estate, to a broader audience. They’re known for bringing unique investment opportunities that were once exclusive to institutions and high-net-worth individuals.

  • Pros: It provides a diverse selection of investment options tailored to cater to different interests and risk profiles. There is a great potential for high returns, particularly in niche market segments.

  • Cons: Certain features are exclusive to accredited investors, restricting access for non-accredited investors. It is important to note that investment risks and returns can differ greatly depending on the specific offering.

The Path to Becoming an Accredited Investor

The Path to Becoming an Accredited Investor

Becoming accredited is often considered a significant milestone in the life of an investor, especially in real estate. However, whether it’s necessary or advantageous depends on your personal investment objectives and tolerance for risk.

Here are some of the benefits of becoming an accredited investor.

  1. Access to Exclusive Opportunities: As an accredited investor, you get exclusive access to investment opportunities that aren’t available to the general public. These include private real estate funds, private placements, and high-yield, high-risk projects like private equity funds, venture capital, and hedge funds. While they provide the potential for higher returns, it’s important to note that they also come with increased risks.

  2. Higher Investment Thresholds: Accredited investors are expected to possess a greater financial understanding and the capacity to endure potential financial losses. This capability enables them to engage in more intricate and significant investment opportunities.

  3. Being Accredited Doesn’t Mean Success: You don’t need to be an accredited investor to succeed in real estate investing. Many non-accredited investors have achieved impressive returns by utilizing publicly available investment options such as REITs, ETFs, or direct property ownership. So, various avenues exist to explore for potential growth in this field.

  4. Risk Consideration: The increased risk that comes with certain opportunities for accredited investors may not match everyone’s investment strategy or risk tolerance.

Conclusion

To sum it all up, non-accredited real estate investors today have plenty of options regarding investment platforms that allow them to get into real estate investing strategies previously only available to accredited investors.

These platforms offer different levels of risk and capital requirements, allowing investors to enter the real estate market in various ways.

Co-invest clubs like SparkRental help you invest but also learn more about commercial real estate. It’s a more personal and tailored experience. Platforms like Concreit, Arrived Homes, and Fundrise offer diverse investment strategies, ranging from easy entry points to direct property ownership.

Each platform has its own advantages, such as accessibility and potential for diversification. But remember, each platform also comes with specific risks and commitment levels.

For investors, it’s crucial to start with small, manageable investments while prioritizing diversification to minimize risks. It’s important to understand each platform’s liquidity and investment terms and conduct thorough research on potential investments.

Keeping up with market trends and surrounding yourself with like-minded people who can guide you is also essential for your success.

So do your due diligence and happy investing!

Non-accredited Investor FAQs

Here are some of the most asked questions I get about being a non-accredited investor.

Can a non-accredited investor invest in hedge funds?

Nope. Usually, regular investors can’t put their money in hedge funds. These funds usually require investors to be accredited because they’re riskier and more complex.

Is there a way for non-accredited investors to invest in fractional real estate?

Absolutely. Non-accredited investors can participate in fractional real estate through crowdfunding platforms. These platforms allow individuals to pool their resources, collectively investing in real estate projects, providing an avenue for non-accredited investors to access opportunities that were traditionally reserved for a more exclusive group.

How do you invest if you’re not an accredited investor?

If you’re not an accredited investor, you can explore crowdfunding platforms that specialize in real estate and offer opportunities for non-accredited individuals. There are also REITs, and the option to directly buy a property yourself.