Many private real estate offerings are open only to accredited investors. The term is defined in Rule 501(a) of the SEC’s Regulation D, and it helps decide who may invest in many unregistered offerings.
A registered offering, like a public stock offering, comes with detailed disclosure filed with the SEC. A private offering relies on an exemption and skips that process, so the most common exemptions limit who can invest, mostly to people and organizations considered able to evaluate the investment and bear a loss. Being accredited says nothing about whether a particular investment is a good one.
Tests for individuals
You are an accredited investor if you meet any one of these tests.
Income
Your income was over $200,000 in each of the last two years, or your joint income with a spouse or spousal equivalent was over $300,000 in each of those years, and you reasonably expect to reach the same level this year. A spousal equivalent is a partner you live with in a relationship generally equivalent to marriage.
Both past years count, and all three years must use the same test, individual or joint. Hypothetical example: someone who earned $250,000 last year but $150,000 the year before does not meet the individual income test, even if this year looks strong.
Net worth
Your net worth is over $1 million, alone or together with a spouse or spousal equivalent. For the joint figure, assets don’t have to be held in both names, and you don’t have to invest together.
Your primary residence is left out of the calculation, and so, mostly, is the debt on it:
- The home’s value doesn’t count as an asset, and debt secured by it, like a mortgage, doesn’t count as a debt, up to the home’s value.
- If that debt is larger than the home is worth, the excess counts as a debt.
- If you increased the debt on your home in the 60 days before you invest, other than to buy the home, that increase counts as a debt. A last-minute home-equity loan can’t push you over the line.
Hypothetical example: a couple owns a home worth $800,000 with a $500,000 mortgage. They have $1.2 million in bank, brokerage and retirement accounts and $100,000 in other debts, like a car loan. Their net worth for this test is $1.1 million: $1.2 million minus $100,000, with the home and its mortgage left out. Had they taken a $200,000 home-equity loan last month and deposited it, their assets would rise to $1.4 million, but the new loan would count as a debt, still leaving $1.1 million.
Professional licenses
You hold a Series 7, Series 65 or Series 82 securities license, and it is in good standing when you invest.
Insiders and fund employees
Two narrower tests apply only to a specific issuer:
- Insiders. Directors, executive officers and general partners of the company selling the securities, or of its general partner, are accredited for that company’s offering.
- Knowledgeable employees. Certain executives and investment staff of a private fund, or of its manager, are accredited for investments in that fund.
Tests for entities and trusts
The main tests for organizations are below. “Not formed for the specific purpose” means a group can’t set up a new company just to pool money and qualify, unless every owner is accredited.
- Organizations with more than $5 million in assets. Corporations, partnerships, LLCs, business trusts and 501(c)(3) nonprofits, if not formed for the specific purpose of the investment.
- Entities owned entirely by accredited investors. Any entity in which every equity owner is accredited, whatever its size.
- Financial institutions. Banks, broker-dealers, registered investment advisers, insurance companies and certain investment funds.
- Certain retirement plans. For example, an employee benefit plan with more than $5 million in assets, or one whose investment decisions are made by a bank, insurance company, registered investment adviser or, for a self-directed plan, only accredited investors.
- Family offices and their clients. A family office with more than $5 million in assets under management, not formed for the purpose and directed by someone able to evaluate the investment’s merits and risks, plus the family clients whose investments it directs.
- Other entities with more than $5 million in investments. Any other type of entity, not formed for the purpose, that owns more than $5 million in investments, such as securities, investment real estate and cash held for investment.
Trusts
A trust commonly qualifies in one of these ways:
- It has more than $5 million in assets, wasn’t formed for the specific purpose of the investment, and its investment is directed by someone with the financial knowledge and experience to evaluate its merits and risks.
- It is a revocable trust, and each grantor (the people who created it and can revoke it) is accredited.
- A bank acting as trustee makes the investment decision.
If you plan to invest through a trust, IRA or other retirement account, ask the sponsor how it will be evaluated, and ask your own attorney.
Why it matters: Regulation D
Many private real estate offerings rely on Rule 506 of Regulation D, which lets a sponsor raise money without registering the offering with the SEC. Rule 506 has two versions, and your accredited status plays a different role in each. See how real estate private equity works.
Rule 506(b)
The sponsor may not use general solicitation, meaning it can’t advertise the offering or market it to the general public. It can accept any number of accredited investors and up to 35 non-accredited investors, who must be financially sophisticated, alone or with a representative, and must receive detailed disclosure. The sponsor needs a reasonable belief that each investor it treats as accredited really is, often based on a self-certification questionnaire.
Rule 506(c)
The sponsor may advertise the offering publicly, including online and on social media. In exchange, every purchaser must be accredited, and the sponsor must take reasonable steps to verify each one’s status. Checking a box on a questionnaire, without more, generally isn’t enough.
| Question | Rule 506(b) | Rule 506(c) |
|---|---|---|
| Can the sponsor advertise? | No | Yes |
| Non-accredited investors? | Up to 35, if sophisticated | None |
| How is status checked? | Reasonable belief, often self-certified | Reasonable steps to verify |
How verification works
Rule 506(c) lists several verification methods, and it allows other steps that are reasonable given the facts:
- Income: reviewing IRS forms that report your income for the last two years, such as W-2s, 1099s, K-1s or filed tax returns, plus your written statement that you expect to reach the threshold this year.
- Net worth: reviewing bank, brokerage and similar statements, tax assessments or independent appraisals dated within the last three months, plus a credit report to check your debts, plus your written statement that you’ve disclosed all of them.
- Professional letter: written confirmation from a registered broker-dealer, an SEC-registered investment adviser, a licensed attorney or a CPA that, within the last three months, they took reasonable steps to verify your status and concluded you’re accredited.
Some sponsors use a third-party verification service. In March 2025, SEC staff also said that a high minimum investment (at least $200,000 for an individual, $1 million for an entity), plus the investor’s written statements that they’re accredited and that no third party is financing it specifically for this investment, can count as reasonable steps if the sponsor knows of nothing to the contrary.
Before you send these documents, ask how they will be collected and stored.
How MPIRE’s form fits in
MPIRE’s offerings are for accredited investors. The Investor Network form asks whether you meet one of the tests above, and you can answer yes, no or not sure.
That answer is self-reported. It’s a first filter that helps MPIRE’s team decide whether to offer an introductory call. It is not verification and doesn’t confirm your status. If you invest in an MPIRE offering, your accredited status is verified before your subscription is accepted, as that offering’s documents describe. See how investing with MPIRE works.
- Securities exemption:
- Verification method:
The tests can change
The dollar thresholds are set by SEC rule and aren’t adjusted for inflation automatically. The SEC expanded the definition in 2020, adding, among other things, the license, knowledgeable-employee, family-office and spousal-equivalent provisions, and by law it must review the definition for individuals at least every four years. Before relying on any summary, including this one, check the current rule with your attorney or CPA.
Key takeaways
- You need to meet only one test: income, net worth, a professional license or a qualifying role.
- Your home is left out of net worth, but new debt on it in the 60 days before you invest, other than to buy it, counts against you.
- Entities and trusts have their own tests, mostly built around $5 million in assets or investments, or accredited owners.
- Under Rule 506(c), every investor must be accredited and the sponsor must take reasonable steps to verify it.
- A yes on MPIRE’s form is a self-reported first filter, not verification.
