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Investing in Passive Real Estate Opportunities as a Non-Accredited Investor: What You Need to Know

Interested in real estate investment but want to avoid the complexities of being a landlord, securing financing, dealing with renovations, managing tenants, navigating permits, and other hassles that come with hands-on real estate activities?

 

I share the sentiment. While I've owned numerous single-family rental properties in the past, my current focus is on passive real estate investments.

 

Passive real estate investments encompass various options such as notes, funds, real estate syndications, and crowdfunding investments. Each option has its own set of advantages and disadvantages, distinct from active real estate investments.

 

However, there's a catch: Many passive investments are restricted to accredited investors only. The government imposes these restrictions under SEC regulations, barring non-accredited individuals with a net worth under $1 million (excluding primary residence) or incomes under $200,000 per year from certain types of investments classified as 506(c).

 

Some passive investments classified under 506(b) do allow non-accredited investors, but they cannot be publicly advertised.

 

So, how can non-accredited investors find opportunities in passive investments that are typically off-limits?

 

Crowdfunding platforms offer a straightforward starting point. Several platforms permit investments from non-accredited investors, such as Groundfloor, Ark7, and Arrived. These platforms vary in quality, historical returns, and reputation, and I've personally had positive experiences with some of the largest ones.

 

Additionally, some real estate syndicators are exploring alternative SEC filings like Reg-CF, which allow non-accredited investor participation. I've invested in such opportunities and found transparency and trustworthiness to be crucial, such as with Goodegg Investments led by founder Annie Dickerson.

 

Networking with other passive investors is another effective approach. Online forums like those on BiggerPockets or dedicated platforms like Left Field Investors facilitate discussions on reputable sponsors and investment opportunities.

 

Joining a passive real estate investment club can also be beneficial. Clubs like Left Field Investors, SparkRental's Co-Investing Club, or the Alternative Investing Club cater to investors seeking passive real estate opportunities, offering a platform to collectively vet deals and share insights.

 

Listening to real estate podcasts that feature syndicators and industry experts is another valuable resource. Podcasts like those hosted by BiggerPockets, Marco Santarelli, Goodegg, and Left Field Investors often showcase sponsors and their investment strategies.

 

For those open to collaborating with active investors, opportunities abound. Partnerships can take various forms, from equity partnerships in property deals to private lending arrangements. However, it's crucial to invest with experienced and trustworthy individuals who have a proven track record in real estate.

 

Certain types of passive real estate investments, such as value-add multifamily syndications, are more accessible to non-accredited investors. However, niche investments like self-storage or industrial properties are harder to find opportunities in.

 

To get started, consider making smaller investments through platforms like Groundfloor or exploring syndications through investment clubs. As you gain experience and confidence, networking with seasoned investors for potential partnerships can further expand your investment portfolio without the day-to-day responsibilities of property management.

 

Overall, passive real estate investment offers a low-stress approach to building a diversified portfolio across various property types and locations, providing exposure to different investment strategies and minimizing the need for hands-on management.


In previous post: "What is MLS in real estate?"

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