Becoming an Accredited Investor

But did you know that accreditation is a definition, not a process? There a few ways you can become an accredited investor.

The SEC governs the rules for buying and selling securities including when and how securities or offerings must be registered with the SEC and what types of investors can participate in a particular offering. As an online commercial real estate investing marketplace, the vast majority of our investment opportunities are available only to accredited investors. While the terminology can be confusing, it’s important to note that “accredited investor” is a definition, not a process.

The SEC has a set of financial criteria for investors to satisfy the definition of “accredited investor” and access certain types of securities offerings only available to accredited investors.  These criteria establish certain thresholds of wealth, verifiable either through salary or personal holdings. These thresholds are intended to protect those who may not possess enough capital, investing experience and/or knowledge and keep them from taking on undue risk in private securities, which are actually less heavily regulated than public equities on the stock market.

These rules and thresholds exist for a reason–they help protect investors. 

How Do I Know If I Am An Accredited Investor?

Put simply, you’re an accredited investor if:

You earned more than $200,000 in each of the last two years (or more than $300,000 together with your spouse in each of those years) and reasonably expect the same for this year.

OR

You have a net worth over $1 million, either alone or together with your spouse, excluding the value of your primary residence.

OR

You are a holder in good standing of the Series 7, Series 65, or Series 82 licenses

An accredited investor doesn’t have to be an individual person; trusts, certain retirement accounts, and LLCs may also qualify for accredited investor status. Each investing capacity may have slightly different criteria to be considered accredited, and this flowchart outlines the accreditation standards for all entity types.

If you qualify as an accredited investor, you’ll need to verify your accreditation status in order to be eligible to invest in the commercial real estate offerings on the CrowdStreet Marketplace.

How Do I Verify My Accreditation?

We have made the accreditation verification process as easy as possible by offering several options. 

Get a letter signed by your CPA, attorney, or wealth advisor

For certain types of securities offerings, the sponsor may require you to verify your status as an accredited investor by a qualified, independent third party in order to satisfy regulatory requirements. Qualified parties under the applicable regulations include a CPA, attorney, registered investment advisor, or registered broker-dealer. If you already work with one of these parties, ask them to complete and sign this one-page template letter, and then scan and upload it to your documents in the CrowdStreet portal.

Use our online, integrated workflow through VerifyInvestor.com

Alternatively, CrowdStreet investors can prove their accreditation status via our integrated third-party partner, VerifyInvestor. If you use the VerifyInvestor integration through the CrowdStreet platform, we are able to absorb the cost of this service on your behalf. To use VerifyInvestor, follow the link in the Transaction Center, which becomes available after submitting closing documents for a given offer.

VerifyInvestor will ask you to securely upload documentation such as W-2s, tax returns, and/or account balance statements for review by their team of attorneys. Your accreditation verification letter will be automatically imported into your CrowdStreet account, and your supporting documents are retained, either by VerifyInvestor or CrowdStreet. The turnaround time is typically one to two days.

Please note that, per SEC rules, each accreditation verification letter is only valid for 90 days. Should you make multiple investments, you will need to periodically renew your verification.

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This article was written by an employee of CrowdStreet, Inc. (“CrowdStreet”) and has been prepared solely for informational purposes. The information contained herein or presented herewith is not a recommendation of, or solicitation for, the subscription, purchase or sale of any security or offering, including but not limited to any offering which may invest in the geographic area(s) or asset type(s) mentioned herein, whether or not such offering is posted on the CrowdStreet Marketplace. Though CrowdStreet believes the information contained and compiled herein has been obtained from sources believed to be reliable, CrowdStreet makes no guarantee, warranty or representation about it. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the subject thereof. All projections, forecasts, and estimates of returns or future performance, and other “forward-looking” information not purely historical in nature are based on assumptions, which are unlikely to be consistent with, and may differ materially from, actual events or conditions. Such forward-looking information only illustrates hypothetical results under certain assumptions.

CrowdStreet is not a registered broker-dealer or investment adviser.  Nothing herein should be construed as an offer, recommendation, or solicitation to buy or sell any security or investment product issued by CrowdStreet or otherwise. This article is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investing involves risk, including the possible loss of money you invest, and past performance does not guarantee future performance. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate.