April 22, 2024

Accredited Investor Opportunities

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Some investments are only open to accredited investors. But which ones will align with your goals and risk tolerance? Read on to find out.

What are the best accredited investor opportunities?
Here are the top 7 accredited investor opportunities:

Accredited investors are the most qualified investors in the business. To qualify, you'll need to meet one or more requirements in income, net worth, asset size, governance status, or professional experience.

As an accredited investor, you have access to more complex and sophisticated types of securities. But what makes these financial ventures worth it despite their risks?

In this article, you'll learn about the various assets, minimum requirements, and investing platforms offered for accredited investors.

How familiar are you with accredited investor opportunities?

Best Accredited Investors Opportunities

Enjoy access to these alternative investment opportunities as an accredited investor. Read on.

What is the average income for an accredited investor?
Accredited investors typically have an income of over $200,000 individually or $300,000 jointly with a spouse in each of the last two years.[1]

What types of accredited investor opportunities interest you most?

Percent: Best For Private Credit

AssetsPrivate Credit
Minimum InvestmentAs low as $500[2]
Target Holding PeriodAs short as 1 month[3]

Percent is a private credit investment platform. It lends money to businesses and individuals who can't access traditional lenders such as banks.

To earn, you just need to sign up, invest in a note offering, and wait for its maturity. It's a great source of passive income as you don't need to monitor it closely and it has a short holding period.

Good annual returns range between 15% and 24% for this asset class.[4] However, when the company you invested in defaults on its debt, you may risk losing all your investment.

If you don't have time to research each deal properly, try Percent's Blended Notes. It diversifies your portfolio for you, but you pay an extra 1% annual management fee. Plus, the minimum is $5,000.[5]

Percent does not charge fees on individual notes unless you profit. Every time you receive your earnings, it takes 10%. For example, in an APY of 15%, you will pay 1.5% in fees. [6]

Pros + Cons

  • Potential for high returns
  • Short holding period
  • Capital at risk if the borrower defaults

Masterworks: Best For Art

AssetsContemporary Art
Minimum Investment$15,000[7]
Target Holding Period3-10 Years[8]

Masterworks is a platform that securitizes blue-chip artworks for investments. It buys an artwork through auction, then it registers that asset as an LLC. Starting at $15,000, you can invest in this low-risk asset class.

You earn money by buying and holding your shares. Buy when it's offered, and then you receive pro-rated gains once Masterworks sells the artwork.

Although the target period is 3-10 years, when the artwork reaches the desired value, it can be sold earlier. On its website, the best appreciation of an artwork was a whopping 788.9%, and it was only held for 29 days.[9]

On the other hand, an artwork held for 282 days was sold with just a 4% increase. Some artworks held for 3 years only had a 17.6% increase.

Aside from the 1.5% annual management fee, Masterworks receives a 20% of the profit when it sells the artwork.[10]

Pros + Cons

  • Access to blue-chip fine art
  • Secondary market
  • High fees

Yieldstreet: Best For Diverse Products

AssetsReal Estate, Venture Capital, Private Equity, Private Credit, Short Term Notes, Structured Notes, Diversified Funds, Transportation, Art, Legal Finance
Minimum InvestmentStarts at $10,000[11]
Target Holding PeriodVaries (3 months - 5 years)[12]

Yieldstreet is an investment platform that offers everything alternative. It offers 10 alternative assets from real estate, to art, to structured notes. Its minimum starts at $10,000.

Yieldstreet has the broadest offering across alternative investment platforms, so the amount you can earn and its holding period vary. There are products that you can hold for as short as 3 months and as long as 5 years.

Typically, you can earn through dividends and share appreciation over time. Dividend payment frequency is not fixed. It can either be paid to you monthly, quarterly, or once an event occurs.

One of the downsides here is the lower annual return rate compared to specialized platforms. Although it offers the same products, some of its competitors outperform it.

Its management fee generally ranges from 1% - 4% annually.[13]

Pros + Cons

  • Various alternative assets
  • Automatically diversified funds
  • Lower returns against specialized platforms

Acretrader: Best For Farmland

AssetsFarmland
Minimum Investment$15,000 - $40,000 depending on land size[14]
Target Holding Period3 - 10 Years

AcreTrader lets you invest in farmland through fractional shares investing. It flips farmland for profit. In addition, it receives rent income from the farmers during the holding period.

As an investor, you can earn in two ways:

  1. Annual cash yield
    Receive dividends or cash yield every December from the rent paid by tenant farmers.

  2. Share price appreciation
    Gain pro-rated income from the sale of the farmland at the end of the holding period.

The target holding period is 3-10 years. However, if a property gains enough value, it can be sold earlier. One of its offerings was closed in just 1.4 years with a 15.5% realized gain.[15]

Farmland as an asset has historically low volatility, which makes this a great option for risk-averse investors. That being said, all investments still carry a certain level of risk.

AcreTrader charges a 0.75% annual servicing fee based on the land value and a 2% pass-through closing fee per investment. Additionally, there's a 5% fee upon the sale of the entire property.[16]

Pros + Cons

  • Stable asset
  • Annual cash yield
  • No secondary market

Crowdstreet: Best For Commercial Real Estate

AssetsCommercial Real Estate
Minimum InvestmentMarketplace/C-REIT: $25,000; Thematic Funds: $100,000+[17]
Target Holding PeriodVaries; 3 - 10 Years

CrowdStreet is a commercial real estate investment platform. It invests in various deals such as multifamily, self-storage, and industrial properties.

You can invest in two ways:

  1. Individual properties
    Choose a single property to invest in if you prefer building your portfolio.

  2. Diversified funds
    Managed fund by CrowdStreet Advisors, which automatically diversifies your investment across various properties.

When you invest in a CrowdStreet offering, you can receive both a cash yield and pro-rated gains at the end of the holding period.

The minimum investment can vary, but it usually starts at $25,000 for marketplace offerings and C-REIT. For Thematic Funds, it can reach up to $100,000+.

Real estate can be typically low risk, but returns are not guaranteed. While some assets may return 88% in 0.6 years, some assets lose their value 100%. In the history of CrowdStreet, more than 10 properties have negative 100% returns.[18]

CrowdStreet does not charge any fees, but you might need to pay sponsors fees for the management of the properties.[19]

Pros + Cons

  • Access to commercial real estate properties
  • High minimum investment
  • Record of 100% loss in some properties

Equitybee: Best For Pre-Ipo Stock Options

AssetsEmployee Stock Options
Minimum Investment$10,000[20]
Target Holding PeriodNone; exit depends on an event

Equitybee is a place for investors to fund the stock options of employees in VC-backed startups. While you won't get ownership here, you can potentially get a share of the profit once the startup successfully does an exit event, like an IPO or M&A.

Many good companies remain private and, therefore, often inaccessible to investors. At Equitybee, you can fund the stock options of employees at Stripe, Reddit, and Starlink. Therefore, despite being private, you can potentially profit once these good companies have an exit event.

The minimum investment is $10,000. Although this platform can potentially give you big returns, you can also lose your entire money if the startup fails.

Since the transfer of the securities is manual, there's a risk that employees will refuse to abide by the contract. In this case, Equitybee will exercise its power of attorney to inform the issuer of the stock to initiate the transfer.

Pros + Cons

  • Access to private companies' shares
  • Possible contract breach
  • May lose entire capital if no exit event occurs

What is an employee stock option?
An employee stock option is a compensation benefit for startup employees to buy shares at a fixed, typically lower, price during an exit event in the future. So when it's time to exercise the option during an IPO or M&A, they can benefit from the potential increase of the share price by having a contract that allows them to buy it at a discount.

Equitymultiple: Best For Cre-Funds

AssetsCommercial Real Estate, Funds, Notes
Minimum InvestmentStarts at $5,000[21]
Target Holding PeriodVaries

EquityMultiple is also an investment for commercial real estate (CRE), but one of the most attractive features of this platform is the Alpine Note and Ascent Income Fund.

Alpine Note is a short-term note that gives you relatively high returns in a short period. It can either be 3, 6, or 9 months long and has a fixed APY of 6% to 7.4%.[22]

It also offers the Ascent Income Fund, which invests in CRE-related senior debt loans. Historically, this income fund has outperformed the Yieldstreet Alternative Income Fund (formerly known as Yieldstreet Prism Fund) and PIMCO Income Fund. Investors will be able to withdraw the amount after 1 year.

Other features you can invest in include buying and holding shares of commercial spaces such as industrial and multifamily properties.

However, some users have complained about their lack of transparency. Apparently, EquityMultiple doesn't communicate losses promptly. Plus, they no longer publish the historical performance of each fund.

Pros + Cons

  • Short-term note with high returns
  • Lack of transparency
  • Complex fees structure

How to Qualify As An Accredited Investor

You can qualify as an accredited investor using two criteria: financial and professional capabilities.[23]

Based on financial criteria, you can be an accredited investor if you have:

  • A net worth of over $1,000,000 aside from your primary residence
  • An individual annual income of $200,000 for the past 2 years and expect the same in the current year.

On professional criteria, you are an accredited investor if you are:

  • Holding the Series 7, Series 65, or Series 82 license
  • A "family client" of a "family office" that qualifies as an accredited investor
  • A director, executive, or general partner of the company selling the securities
  • Considered "knowledgeable employees" of the fund (for private fund investments)

If you meet these requirements, the investment platform will request the necessary proof according to their onboarding process. This can include financial documents, tax returns, bank statements, etc.

There's no "exam" that grants an accreditor investor license.

What's your main goal as an accredited investor?

Methodology

One of the most important things for an accredited investor is to protect their capital and grow it at the same time, so we chose assets that can match such various risk appetites.

Modern investing platforms, especially those that offer alternative assets, can be quite unpredictable. So we only considered those that have at least shown considerable results in the past.

To ensure that accredited investors will be able to form a comprehensive and diverse portfolio, we chose platforms that could meet each liquidity need from short-term to long-term holdings.

Bottom Line

There are various investment opportunities accredited investors can explore. But some are riskier than others, and it would depend on your risk appetite whether you'd go for it or not.

Before choosing a platform, do a lot of research about which asset you'd like to trade, see if you're fine with the liquidity options it has, and if it has decent returns for you.

References

  1. ^ U.S. Securities and Exchange Commission. Accredited Investor, Retrieved 03/13/2024
  2. ^ Percent. FAQ: What is the minimum amount of money I can invest?, Retrieved 01/12/2024
  3. ^ Percent. Why Percent?, Retrieved 01/12/2024
  4. ^ Percent. Recently Launched, Retrieved 01/12/2024
  5. ^ Percent. Blended Notes, Retrieved 01/12/2024
  6. ^ Percent. FAQ: Are there fees to invest on the Percent platform?, Retrieved 01/12/2024
  7. ^ Masterworks. FAQ: Is there a minimum investment for Masterworks?, Retrieved 01/12/2024
  8. ^ Masterworks. How it works, Retrieved 04/23/2024
  9. ^ Masterworks. Sold Artworks: Annualized Net & Total Returns, Retrieved 01/12/2024
  10. ^ Masterworks. FAQ: What are the fees associated with Masterworks?, Retrieved 01/12/2024
  11. ^ Yieldstreet. Alternative Investments, Retrieved 01/12/2024
  12. ^ Yieldstreet. Start investing today, Retrieved 01/12/2024
  13. ^ Yieldstreet. What are Yieldstreet's fees?, Retrieved 01/12/2024
  14. ^ Acretrader.FAQ: Is there a minimum to invest with AcreTrader?, Retrieved 01/12/2024
  15. ^ Acretrader. Exited Investments, Retrieved 01/12/2024
  16. ^ Acretrader. FAQ: What are the costs associated with using AcreTrader?, Retrieved 03/13/2024
  17. ^ Crowdstreet. FAQ: What is the investment minimum? Is there an early exit option?, Retrieved 01/12/2024
  18. ^ Crowdstreet. Crowdstreet Realized Track Record, Retrieved 01/12/2024
  19. ^ Crowdstreet. Does CrowdStreet charge fees for investors?, Retrieved 01/12/2024
  20. ^ Equitybee. FAQ: What is the minimum investment amount?, Retrieved 01/12/2024
  21. ^ EquityMultiple. FAQ: What is EquityMultiple and why should I use it to invest in real state?, Retrieved 01/12/2024
  22. ^ EquityMultiple. Alpine Note, Retrieved 01/12/2024
  23. ^ US SEC. Accredited Investor, Retrieved 01/12/2024

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