Who counts as an accredited investor?
Friends & family · Video 4 of 8 · 0:51 ·
A person qualifies through any one of three doors: income over $200,000 in each of the last two years (over $300,000 with a spouse or partner) with the same expected this year; net worth over $1 million, not counting their home; or a Series 7, 65 or 82 license. New mortgage debt taken on in the 60 days before investing can count against net worth.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- Income: more than $200,000 in each of the last two years, or $300,000 jointly, and expected again.
- Net worth: more than $1 million, excluding the primary residence.
- Professional certification: Series 7, 65 or 82 in good standing.
- Any one test is enough.
- An LLC investor: over $5 million in assets and not formed to invest, or every owner accredited.
- Mortgage debt incurred in the 60 days before the sale can count as a liability.
Transcript
Founder: My uncle just texted: put me down for $100,000. Can I take it?
Operator: First question: is he accredited? What does he make?
Founder: About $250,000 a year.
Operator: If he made over $200,000 two years running, and expects it again, yes. With a spouse or partner, it's over $300,000 together.
Founder: And if last year was rough?
Operator: Then door two: net worth over $1 million, not counting his home.
Operator: Or door three: he holds a Series 7, 65 or 82 license.
Operator: Any one door is enough.
Founder: What if he invests through his LLC?
Operator: Then the LLC needs its own test: over $5 million in assets, and not set up just for this. Or every one of its owners is accredited.
Founder: He just refinanced his house, though.
Operator: Then check the timing. New mortgage debt from the last 60 days can count against his net worth.
Founder: So, my uncle's $100,000...