You Don’t Have To Be An Accredited Investor To Invest In Real Estate

9March, 2020

You Don’t Have To Be An Accredited Investor To Invest In Real Estate

By Shirley Xu

Shout-out to All the Non-accredited Investors

If you’re not an accredited investor and you’re reading this right now, that means you’re light years ahead of where I was when I was a non-accredited investor.

When I was a non-accredited investor, terms like passive income and financial freedom weren’t part of my vocabulary. I wasn’t looking to build wealth or retire early. I mostly focused on trying to get promotions at work and making sure I was climbing the corporate ladder.

So if you’re not an accredited investor, you’re on the fast track to financial freedom by doing this research. You should be really proud of yourself.

Investing in Real Estate When You’re Not Yet An Accredited Investor

All that being said, I know how disheartening it can be to get all excited about financial freedom and to daydream about quitting your job, only to discover that you’re non-accredited and to realize that some private real estate investment opportunities are not open to you.

However, real estate investing is so vast and diverse. There’s something for everyone, especially if you’re willing to put in a little work.

So that’s what I want to discuss today – 8 ways that anyone can invest in real estate and build passive income, whether or not you’re an accredited investor:

Buy and Hold Rental Properties
House Hacking
Fix-and-flips
BRRRR Strategy
Private Lending
Joint Venture Partnerships
Real Estate Crowdfunding Platforms
Private Real Estate Syndications

You Don’t Have To Be An Accredited Investor To Invest In Real EstateYou Don’t Have To Be An Accredited Investor To Invest In Real Estate

#1 – Buy and Hold Rental Properties

Buying and holding rental properties is one of the methods of real estate investing that’s most familiar to people, whether you’re an accredited investor or now.

You buy a small property, typically a single family home, and rent it out. If you’re willing to be a little more hands-on, maybe you handle the property management yourself. If you’d rather be more hands-off, you can hire professional property management.

One of the biggest benefits of investing in rental properties is that you are in control. You get to decide on the market, you get to choose the specific property, you get to decide which renovations to do and which tenants to accept. On the flip side of that, however, is the responsibility. When things go wrong, you are responsible for fixing them, or hiring someone to do so.

#2 – House Hacking

Rent a house or a duplex, live in part and rent the rest out, The rent from others pay your mortgage each month. This can be a fantastic way to get started in real estate investing, especially if you live in a pricier market like San Francisco or New York.

#3 – Fix-and-flips

If you’re willing to be a very hands-on real estate investor and are looking for a short-term return, a fix-and-flip could be a great option for you. You can invest in a fix-and-flip whether or not you’re an accredited investor.

#4 – BRRRR Strategy

Have you ever wondered what would happen if buy-and-hold and fix-and-flip got married and had a baby? That’s essentially what the BRRRR strategy is.

BRRRR stands for Buy, Rehab, Rent out, Refinance, Repeat. The first half of this strategy looks like a fix-and-flip. You buy a property in need of some love, and you go in and renovate it.

If you are able to pull out all of your original capital, you would essentially be making infinite returns on the property.

Then, with the money you pull out, you repeat the process with another property.

The BRRRR strategy is an extremely powerful tool for building wealth, whether you’re an accredited investor or not.

#5 – Private Lending

When most people think of investing in real estate, they think about the equity side of things. Putting in a down payment to buy a house, then building equity over time.

However, on the other side of the coin is investing in debt. That is, you can loan someone money to, say, do a fix-and-flip. The best part is, you don’t have to be an accredited investor to do so.

Maybe you have a full-time job and don’t have the energy to take on a fix-and-flip yourself, but you meet someone who wants to do a fix-and-flip but doesn’t have the capital to get started.

You could loan them the money for, say, 12 months at 10% interest. Before the 12 months are up, they sell the fix-and-flip for a profit, you earn 10% interest on the original amount you loaned them, and everyone wins. And, because the loan is backed by the property, your risk is relatively low. If you are interested in become a private lender, please contact us. We can help to facilitate lending to flippers.

#6 – Joint Venture Partnerships

If you’re itching to get into multifamily or other commercial real estate investing but are not yet an accredited investor, one way you might break in is through a joint venture (JV) partnership. If you have some capital to invest and skills to contribute, you could be a great potential JV partner.

In a JV partnership, a small group of people come together to invest in a property together. Maybe one person does the underwriting, another person deals with the renovations, and another person handles the asset management.

Each person on the team has an active role, so there are no passive investors.

#7 – Real Estate Crowdfunding Platforms

Through these platforms, you can find a variety of real estate projects to invest in, everything from fix-and-flips to large-scale value-add multifamily projects.

As a passive investor in these projects, you invest your capital, then receive a piece of the returns, all without having to do any of the work.

The downside of these platforms, especially for non-accredited investors, is that, due to SEC regulations, most of the opportunities are open to accredited investors only.

However, there are a few real estate crowdfunding sites that offer REITs (real estate investment trusts) for non-accredited investors.

While REITs don’t give you the benefits of direct ownership, they are a vehicle for passive real estate investment, and they typically come with very low minimum investments, sometimes as low as a few hundred dollars.

Here are two real estate crowdfunding platforms that offer opportunities for non-accredited investors: Fundrise’s eREIT and RealtyMogul’s MogulREIT.

Open to non-accredited investors: There are a few real estate crowdfunding platforms that offer REITs to non-accredited investors.

#8 – Private Real Estate Syndications

Real estate syndications are essentially group investments. A group of people come together and pool their resources to invest in an asset together. Now, you may be thinking, that sounds an awful lot like the JV partnership mentioned above.

And you would be right, except that in a syndication, most of the investors are passive investors. There’s a small group of people, the general partners, who have an active role. The rest of the investors are limited partner passive investors (unlike in a JV partnership, where everyone has an active role).

There are a wide array of real estate syndications out there. Many are open to accredited investors only, due to SEC regulations. However, there are some opportunities open to non-accredited investors as well.

The opportunities that are open to non-accredited investors (i.e., 506(b) deals) are not allowed to be publicly advertised though, so you have to know someone who’s part of the general partnership, in order to invest in that deal.

This is where the digging comes in. If you are not an accredited investor and want to passively invest in a real estate syndication, you’ve got to be willing to go out there and network with people to find deals that will accept non-accredited investors.

Open to non-accredited investors: Some real estate syndications are open to non-accredited investors, but those deals cannot be publicly advertised, so you have to know someone who’s part of the general partnership in order to invest in those deals.

You Don’t Have To Be An Accredited Investor To Invest In Real Estate

Recap and Takeaways

As previously mentioned, if you’re not an accredited investor and you’re reading this article, serious kudos to you. Just by knowing that you’re not yet accredited and taking the steps to build passive income, you’re already way ahead of the curve.

Many people who start out in real estate investing do so through small rentals, so they often don’t even know what the term accredited means, nor do they need to.

It’s only the people who learn about real estate syndications early on in their investing journeys that come across this delineation between accredited and non-accredited and then realize that certain opportunities are closed to them.

But don’t let this get you down. The opportunities open to accredited investors only are not necessarily the best deals. And often, there are faster and more powerful ways to accumulate wealth through real estate, especially if you’re willing to put in a little work.

In this article, we discussed 8 of the many, many ways you can invest in real estate as a non-accredited investor:

Buy and Hold Rental Properties
House Hacking
Fix-and-flips
BRRRR Strategy
Private Lending
Joint Venture Partnerships
Real Estate Crowdfunding Platforms
Private Real Estate Syndications

Between my business partner and me, we’ve tried pretty much all of these, and we’ve discovered some of the pros and cons of each.

We’re always happy to help you on your investing journey, whether through helping you invest in deals that fit with your investing goals or connecting you with the right people and resources to help you on your way.

You can reach out to me anytime at shirley@goldenbridgeinvestment.com.

Happy investing!