The term ‘accredited investor’ pops up a lot in the financial world, particularly for those seeking out passive income opportunities in the stock market or real estate world. Accredited investors, as the name suggests, are those investors who come with a bit of wealth behind them and have a designated status that allows for larger investing opportunities.
Those new to investing, as well as those coming in with small amounts of money, may find their opportunities limited, as many investing platforms are only open to accredited investors. We’ll take a look at what exactly defines an accredited investor and how addy works with them to support those who may not be there yet.
What is an accredited investor?
At its most basic, an accredited investor is defined as someone who, on their own or with a spouse, earns a certain amount of money a year. That bar is set well above what the average person makes annually.
In Canada, there are certain thresholds that a person needs to cross in order to be considered an accredited investor. There is not one single piece of criteria that needs to be met, but instead 20 different definitions, any one of which can be met to achieve such status. A Canadian financial institution is considered an accredited investor, as are crown corporations or even municipal governments.
However, there are a few main definitions that make up the individual accredited investors as opposed to institutions. Namely, the following:
- an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that before taxes, but net of any related liabilities, exceeds $1,000,000.
- an individual whose net income before taxes exceeded $200,000 in each of the 2 most recent calendar years or whose net income before taxes combined with that of a spouse exceeded $300,000 in each of the 2 most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year.
- an individual who, either alone or with a spouse, has net assets of at least $5,000,000.
- a person, other than an individual or investment fund, that has net assets of at least $5,000,000 as shown on its most recently prepared financial statements,
So, the average Canadian is not an accredited investor, which means that a lot of opportunities for investing are unavailable to them.That’s where addy comes in.
Investing with addy
addy believes in real estate for all, breaking down barriers and creating opportunities in a market where the average Canadian is being priced out. addy seeks out institutional grade commercial real estate investments. These properties often cost anywhere from $3 million all the way up to $100 million.
To make these opportunities accessible, addy operates on a platform of crowdfunding real estate, allowing many people to invest relatively small amounts. By pooling money together, these once unavailable opportunities are now ripe for investing. addy allows members to invest anywhere from $1 to $1,500 towards a single property.
While addy wants to break down barriers to the average Canadian, particularly for younger generations with little or no financial experience, we can’t do it without accredited investors.
How accredited investors and addy work together
One of the main ways an accredited investor can help addy is by opening doors to bigger and potentially more lucrative deals. Many opportunities addy looks at have a minimum investment amount beyond the reach of the addy community on their own. An accredited investor, however, can come along and top up an issuance to meet the minimum amount and keep the opportunity alive.
What’s more, increasing an issuance translates into a higher potential return on investment. That’s because a flat fee is often involved with all deals. If the issuance is higher, that fee is spread across more people, thereby reducing the cost and increasing the potential net return.
Accredited investors can become members and join the addy crowdfunding cause for $500 a year. There are few perks that come along with accredited investor members: addy removes the cap on investing, allows $10,000 in instant funds and grants access to special channels our exciting new Discord server – more than the price of admission.
For those just starting out on their investment journey, Charter Membership costs $25 for the year, and there are no requirements concerning your financial background or real estate acumen. Real estate investing should be simple and available to all.