So, you’re ready to scale up your investment activities…
And you wonder: Is there some way to get “insider” access to bigger and better deals? A way into the back room where the real action is?
Yes, Fine Restaurants Are Nice…
When you’re starting out and your net worth is lower (and your cash flow, too), it’s like you’ve acquired a taste for dining out in some pretty upscale restaurants…
You’ve got a couple of favorites. They know your name, maybe give you some discounts because you drop a lot of money there. It’s great to sit by the window and enjoy the finest food, the exquisite service, and even the gorgeous scenery.
But then you hear about this private club across town…
To say it’s “exclusive” would be an understatement. And the restaurant there? It’s even better than all the others in town. But there’s more: they have “events” there all the time ‒ auctions, fundraisers, celebrations ‒ and you know that’s where the elites make their connections… and their deals. So you really want to meet these people and get into their world.
But you can’t even get through the front door. “Sorry, you’re not a member of The Club. You can’t come in.”
You could try to force your way in… but that would just show a lack of class. (Besides, this doorkeeper is a big guy ‒ you’re probably not going to get past him.)
It’s pretty frustrating.
Until you get a letter in the mail one day…
Turns out, you’ve been invited as a Guest… a Member has given you an “in.”
But Partying with the Elites Is Even Better!
So this time, when you show up at the door, it’s a whole different deal. “Yes, you’re on the list, Sir/Ma’am. Step right in ‒ welcome to the Club.”
You’ve got access to new relationships, new business opportunities, and a whole new level of living well.
That’s how it is with “accredited investor” status…
You see, there are individuals and businesses and funds out there who are always looking for investors for big-ticket assets and opportunities. Deals where the stakes are high. Here, potential investors need to pony up substantial down payments and demonstrate the ability to follow through on managing all the details ‒including the large cash flows ‒ that go with these complex assets and properties.
So they put up safeguards and barriers to keep these deals more or less secret, pretty much inaccessible to folks who just don’t have the assets to play at that level.
Look at it from their perspective: if you’re looking to make a deal on a property that may require, say, a $250,000 down payment on a mortgage, do you want to field phone calls and other inquiries every day from people who only have $50,000 or so to work with?
That just wouldn’t make sense. You only want leads from individuals who have proven they have the resources to potentially do a deal. (And I’m not even touching on the different investor requirements major fund managers are looking for…)
Enter the Gatekeepers
That’s where being an accredited investor comes in. Being recognized as one simply indicates to the person looking for investors that it’s worthwhile to let you in the door…
It saves them and you the wasted time (and possibly embarrassment) of talking about a potential deal that’s never going to happen. But if you do qualify as an accredited investor, then they’ll know it’s at least worth a little time and effort to consider working with you.
So, yeah, this level of investing works kind of like a Club, and maybe it’s elitist. But it’s just a way to protect the time and money of everyone involved.
Now, this isn’t an article about the “How” of becoming an accredited investor. Suffice it to say, you can learn those details via Internet research, reading books, and even asking us here at RP Capital.
What I’ll say for now is, it’s not some official designation ‒ like you take a test, get a certain score, and then walk around with a badge that says “Accredited Investor” on it. It’s more like a series of hoops you have to jump through when you present yourself as a possible investor in an opportunity.
Put simply, at the time I’m writing this, you can qualify in one of two ways: by earning a high income ($200K per year for an individual, or $300K if married), or by having a high net worth ($1M in net assets, not including your primary residence). Depending on the nature of the deal you’re trying to get into, the other party will take some kind of steps to verify that you meet these criteria. If you do, then you’re an “accredited investor.”
So there are advantages to becoming an accredited investor… when you’ve made it to that level. Once you’ve learned to play the game and gotten some wins under your belt as a real estate investor, you’ll be ready to expand your investment activities. And being recognized as an accredited investor just might make good sense for you then…
Are you ready to see how RP Capital can help you invest in real estate and grow your portfolio to where you can become an accredited investor?
Give us a call at (801) 990-5109 orschedule your free appointment hereto build a personalized Wealth Plan. Before you know it, you’ll see your real estate investment knowledge grow, and your plan for financial success take shape…