What Would Accreditation Change Mean for Real Estate Investors?
Investors determined by a test to be ‘financially savvy’ would be allowed to invest in ways that they can’t now without having a certain level of assets.
Recent proposed congressional changes to investor accreditation laws promise to leave a long-term mark on the commercial real estate landscape.
Previously, only achievable by having a net income of over $1 million or more than $200,000 in annual net earned income during the last two years, the new proposal from the House of Representatives will allow investors to achieve accreditation status by passing a test that proves their “financial savvy.”
The test, which would be administered by FINRA, would be provided free of charge and would assess the individual's competency and knowledge of the private market. It would also address topics like various securities both public and private, corporate governance and risks associated with private assets, like limited liquidity and different disclosure rules.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
At the heart of these changes is the aim to democratize investment opportunities to the mainstream by lowering barriers to entry for individuals to invest their capital, thereby potentially altering the dynamics of real estate funding. But what are the realities behind these alterations? Ultimately, this should positively influence the securities space so long as new investors are prudent as they assess real estate offerings if they become more mainstream.
Expanding the investor pool
Currently, accredited investors are qualified with more than $200,000 in earned income per year individually, $300,000 per couple or $1 million in net worth. This approach primarily limits real estate investment opportunities to institutional investors or high-net-worth individuals.
With the relaxation of these criteria, a broader spectrum of investors would be eligible to participate in various real estate ventures, significantly expanding the capital pool available for developers and real estate companies and, in turn, providing investors with an additional source of diversification for their assets.
Boosting crowdfunding platforms
The rise of real estate crowdfunding platforms has been remarkable in the past decade. However, their growth was somewhat stifled by stringent accreditation laws. With eased regulations, these platforms could witness an influx of investors. This would not only provide more investment opportunities but also support smaller, innovative real estate projects that might have been overlooked by larger institutional investors.
More investors means more development in the long term, because it means more capital is making its way into the real estate industry. This would offer investors more project diversification and opportunities to participate in the real estate space.
Enhanced project diversification
With more investors in the mix, developers and real estate entrepreneurs will have the flexibility to explore a variety of projects. They won't be pigeonholed into catering exclusively to the whims and risk appetites of a select few. This means the market and investors may see a broader range of projects, from affordable housing and green buildings to tech-integrated commercial spaces.
For example, at 1031 Crowdfunding, we offer a diverse group of projects in spaces like senior housing, multifamily and medical facilities that provide investors with real estate stratification of investments.
The potential relaxation of investor accreditation laws represents a pivotal moment for the real estate industry. By democratizing access, enhancing the robustness of the investment environment and encouraging a broader range of projects, these changes would herald a new era for real estate development and investment.
As with all reforms, careful oversight and ongoing evaluation will be necessary, but the initial indicators point toward a promising future for the industry.
If you’re interested in learning more about this and other potential legislation affecting real estate securities, check out our website.
Related Content
- Invest Like the Rich: Are Direct Investments Right for You?
- How to Get into Alternative Investing
- Five Downsides of Investing in Alternatives
- How to Invest in Companies Before They Go Public
-
Small Caps Can Only Lead Stocks So High: Stock Market TodayThe main U.S. equity indexes were down for the week, but small-cap stocks look as healthy as they ever have.
-
Ask the Editor: Tips for Filing Your 1040Ask the Editor In this week's Ask the Editor Q&A, Joy Taylor answers questions on preparing and filing your 2025 Form 1040.
-
Is Direct Primary Care Right for Your Health Needs?With the direct primary care model, you pay a membership fee for more personalized medical services.
-
If You're in the 2% Club and Have a Pension, the 60/40 Portfolio Could Hold You BackIncome from your pension, savings and Social Security could provide the protection bonds usually offer, freeing you up for a more growth-oriented allocation.
-
Bye-Bye, Snowbirds: Wealthy Americans Are Relocating Permanently for Retirement — and This Financial Adviser Can't Fault Their LogicWhy head south for the winter and pay for two properties when you can have a better lifestyle year-round in a less expensive state?
-
Consider These 4 Tweaks to Your 2026 Financial Plan, Courtesy of a Financial PlannerThere's never a bad time to make or review a financial plan. But recent changes to the financial landscape might make it especially important to do so now.
-
We Know You Hate Your Insurance, But Here's Why You Should Show It Some LoveSure, it's pricey, the policies are confusing, and the claims process is slow, but insurance is essentially the friend who shows up during life's worst moments.
-
Is a Caregiving Strategy — for Yourself and Others — Missing From Your Retirement Plan?Millions of people over 65 care for grandkids, adult kids or aging parents and will also need care themselves. Building a caregiving strategy is crucial.
-
6 Financially Savvy Power Moves for Women in 2026 (Prepare to Be in Charge!)Don't let the day-to-day get in the way of long-term financial planning. Here's how to get organized — including a reminder to dream big about your future.
-
Private Equity Is Fundamentally Changing: What Now for Investors and Business Owners?For 40 years, private equity enjoyed extraordinary returns thanks to falling rates and abundant credit. That's changed. What should PE firms and clients do now?
-
I'm a Real Estate Expert: 2026 Marks a Seismic Shift in Tax Rules, and Investors Could Reap Millions in RewardsThree major tax strategies will align in 2026, creating unique opportunities for real estate investors to significantly grow their wealth. Here's how it works.
