Real Estate Crowdfunding for Non-Accredited Investors

This blog focuses on the reality of real estate crowdfunding for non-accredited investors.

Real estate has long been considered a cornerstone of wealth-building, but traditional real estate investment options often require substantial capital and hands-on management. Enter real estate crowdfunding, a game-changer that has opened doors to a wider range of investors, offering the potential for strong returns, passive income, and effective risk control through diversification.

As we’ve discussed in other blogs, crowdfunded real estate investing has treated us extremely well over the years.  That’s not to say that we haven’t lost money along the way. But overall, we’ve enjoyed very strong returns from our crowdfunding investments.

As humans, it’s in our nature to share good things with others. When we discover an investment avenue that provides strong returns, passive income, and diversification, we naturally want to introduce friends, family, and colleagues to the opportunity. However, here’s where we encounter a barrier — some real estate crowdfunding deals are open to accredited investors only.

In this blog, we’ll explore the difference between accredited and non-accredited investors, highlight the origins of these distinctions, and discuss how a real estate investor’s distinction (or dare we say “class”) impacts their access to investment opportunities.

Preliminary Note – For brevity’s sake, we will not discuss every law, act, ordinance, or regulation impacting equity investing, private placements, or crowdfunding within this blog. Instead, we’ll do our best to hit the points that matter to today’s investors. We are not lawyers or investment professionals, so please let us know if we’ve made any errors or if any important information is missing.

What is Real Estate Crowdfunding?

Real estate crowdfunding is a modern investment strategy that has revolutionized the way people participate in the real estate market. It combines the principles of crowdfunding with real estate investment, allowing multiple investors to pool their capital to fund real estate projects. This innovative approach has democratized real estate investing, making it accessible to a broader range of investors, from seasoned professionals to beginners looking to diversify their investment portfolios.

At its core, real estate crowdfunding involves a group of investors collectively financing a real estate project (often commercial real estate investments or projects) through an online platform or crowdfunding portal.

Pros and Cons of Real Estate Crowdfunding

Real estate crowdfunding offers a wide range of benefits, including (but certainly not limited to):

  • Access to institutional quality investments
  • Potential to earn higher returns than savings accounts, bonds, etc.
  • Ability to diversify investments across platforms, investment types, asset types, geographies, etc.
  • Lower minimum investment than traditional real estate investing

Unfortunately, there are also challenges and risks associated with crowdfunded real estate, including:

  • Higher risk compared to savings accounts, bonds, T-bills, etc.
  • Lack of liquidity (funds may be tied up for years)
  • Single-asset projects often require a $10,000+ initial investment.
  • Some deals are not available to non-accredited investors.

As the saying goes, nothing is perfect.  It’s up to you to decide how much money (if any) you want to invest in real estate crowdfunding.  We made our decision years ago, and we’ve profited ever since. But please don’t take our word for it. You must do your own homework. You must conduct your own research. You must make your own investment decisions.

However, there’s a fly in the financial ointment. Fair or not, as listed in the last bullet point above, not all real estate crowdfunding opportunities (or platforms for that matter) are open to all investors. But before you call your congressperson or hire an attorney to fight for your rights, let’s spend a few minutes discussing the rhyme and reason behind this situation.

What is an Accredited Investor?

As described in our blog on The History of Real Estate Crowdfunding, back in the day, the U.S. capital markets were a bit like the Wild West in that they were lightly regulated and risky. Consider this … during the Great Depression (from 1929 to 1932), the Dow Jones lost almost 90% of its value, and over 9,000 banks failed.

To protect the general public from financial risks that they may not fully understand, the U.S. Government passed the Securities Act of 1933 (the ’33 Act) and the Securities Exchange Act of 1934.  The term “accredited investor” was introduced as a part of the ’33 Act.

Simply stated, the distinction between an accredited and a non-accredited investor was created to protect investors from financial risks they may not fully understand and financial losses they may not be able to afford.

Per SEC guidelines, the current definition (it has been updated over the years) of accredited investors are individuals who:

  • Have a net worth of more than $1 million (excluding their primary residence) OR
  • Earned an annual income of more than $200,000 individually or $300,000 with their spouse or partner for the last two years and expect to make the same or more in the next year

Unlike the somewhat subjective concepts of “rich,” “well-off,” or “successful,” the criteria for being an accredited investor are clearly defined. In other words, you’re either an accredited or non-accredited investor. There’s no gray area here.

Finally, those claiming to qualify as an accredited investor will be asked to provide documentation (e.g., a letter from a certified accountant) confirming that they meet the income and/or net worth requirements.

Legislation Governing Real Estate Crowdfunding

The Securities Act of 1933 is just one of the laws and regulations that impact crowdfunding investments, including real estate crowdfunding.  The table below provides information about some relevant regulations.

Why Have Any Restrictions on Non-Accredited Investors?

Real Estate Crowdfunding for Non-Accredited Investors - Legislation

While all of the regs and acts listed above (and others) impact real estate crowdfunding to some degree, Regulation A+ and Regulation D impose limits on non-accredited investors.

In theory, companies (meaning project sponsors or developers) and crowd real estate platforms could choose to follow Rule 506(b) of Regulation D which allows up to 35 nonaccredited investors to participate in crowdfunding campaigns.  However, this would mean the sponsors/platform …

  • Would not be able to advertise the offering to the general public, which would limit the pool of investors (per Reg D)
  • Would have to track and enforce a limit on the number of non-accredited investors who participate (per Reg D)
  • Would have to ensure that participating non-accredited investors do not exceed their annual investment limits (per Reg A)

The takeaway is that it’s easier, safer, and more efficient for sponsors and platforms to allow only accredited investors (meaning wealthy investors) to participate in most of their offerings, especially single-asset projects. Also, this allows them to advertise their offerings to the public to attract as many high-net-worth investors as possible.

To be clear, these investment limits are intended to protect non-accredited investors. When viewed through this protective lens, these regs and the actions of the project sponsors and crowdfunding platforms make perfect sense.  However, the net effect is that they limit the opportunities open to non-accredited investors.

Platforms Offering Real Estate Crowdfunding for Non-Accredited Investors

The table below highlights a few real estate crowdfunding platforms that allow (or sometimes allow) non-accredited investors to participate.

As shown, some real estate crowdfunding sites allow non-accredited investors to invest in commercial real estate, and investment minimums can be high.

Also, these real estate investments for non-accredited investors are subject to limitations on both the number of non-accredited investors who can participate (per Regulation D) and the annual investment limits for non-accredited investors (per Regulation A).


There are many rules and regulations governing real estate crowdfunding, including several that outline the types of investors who can participate in certain crowdfunding campaigns, as well as how much they can invest.

To ensure compliance with SEC and other regulations, many real estate investing sites  – including some of the leading players – only allow non-accredited investors to participate in funds and real estate investment trusts (eREITs) – subject to minimums and limits.

This leaves relatively few real estate investment opportunities for non-accredited individual investors who want to get started in commercial real estate investing and build a real estate portfolio.

In the future, we hope to provide more information about the best real estate crowdfunding sites for non-accredited investors.

And so it goes …


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