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Real Estate Investing for Accredited Investors

Real Estate Investing for Accredited Investors

Shifting sands in the investment world reveal a significant trend: accredited investors are increasingly turning their attention and capital towards real estate. As of 2023, 30% of investor capital flows into real estate, outpacing traditional stocks. Yet, this trend isn’t merely about diversification; it’s rooted in a robust confidence in the real estate sector’s capacity to thrive amid economic headwinds. 

With over 19 million accredited investor households in the U.S. alone, controlling immense wealth, their collective move towards residential properties signals a more profound belief in the market’s resilience and growth potential. So, let’s explore the forces driving this shift and offer insights into the evolving preferences and strategic decisions shaping the future of real estate investment.

Quick Summary

Before we get into the meat and potatoes of the article, below are 5 of the top investment options for accredited investors in real estate:

  1. Real Estate Syndications: These are private investment groups where investors pool their resources to invest in properties they might not be able to afford individually.
  2. Crowdfunding Platforms: Online crowdfunded real estate investing is a new opportunity where people pool their money to back real estate projects. 
  3. Real Estate Investment Trusts (REITs): These companies own, manage, or finance income-producing real estate and must pass 90% of their income onto investors as dividends.
  4. Private Equity: This involves investing directly in private companies or conducting buyouts of public companies that result in a delisting of public equity.
  5. Secondary Trading: This involves the buying or selling of pre-existing investor commitments to private equity and other alternative investment funds.

How Do You Verify An Investor Is Accredited?

Below are a few steps you can take to verify if an investor is accredited:

  • Self-Verification: Investors can self-certify their accredited status. However, this is only sometimes reliable.
  • Income Verification: Check if the investor has an income of over $200,000 (or $300,000 with a spouse) in the past two years and expects the same this year.
  • Net Worth Verification: The investor’s net worth should be over $1 million, excluding the value of their primary residence.
  • Professional Letters: Obtain written confirmation from a registered broker-dealer, investment adviser, licensed attorney, or certified accountant verifying the investor’s accredited status.
  • Third-Party Verification: Use a trusted third-party service specializing in investor accreditation verification.
  • Repeat Verification: For ongoing investments, reverify the investor’s accredited status at least every three months.

Real Estate Investment Strategies For Accredited Investors in 2024

In 2024, the terrain of real estate investment continues to evolve, presenting accredited investors with many opportunities to grow their portfolios. It’s an era where the fusion of technology and traditional investment strategies can yield unprecedented benefits. However, understanding the current market dynamics is necessary. Here, we dive into a few promising real estate investment strategies, focusing on the benefits.

Embracing Tradition and Technology

In the digital age, the essence of traditional real estate companies has remained strong. According to Forbes, in 2024, these entities will persist and thrive by incorporating proptech innovations. The secret sauce? The emotional connection fostered by local agents becomes further enriched with the efficiency of modern technology. Imagine the blend of a personal touch with the precision of AI-driven tools like multiple listing software and digital contracts—this synergy promises to elevate the investment experience, ensuring both accuracy and a deep-rooted sense of community.

Rental Properties: A Timeless Venture

According to Time Magazine, the appeal of rental properties will remain strong in 2024, as they offer a multifaceted avenue for wealth generation. Whether through short-term or long-term tenancies, this strategy is not just about earning passive income. It’s about the joy of building long-term value while leveraging tax deductions and fostering positive cash flows. Whether you’re purchasing a downtown apartment or a suburban home, the potential for appreciation over time makes this a cornerstone strategy for any serious investor.

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Innovative Investment Through Online Platforms

2024 also heralds the rise of online real estate investing platforms, a frontier for accredited investors seeking to diversify beyond traditional avenues. These platforms provide a unique proposition—joining forces with other investors to back promising real estate ventures. While it’s true that this path offers the lure of higher returns compared to traditional REITs, it has a higher risk profile and less liquidity. Yet, the rewards can be substantial for the bold investor, offering a slice of the real estate market that was once out of reach.

Advantages and  Risks Within

Traditional Real Estate Companies– Personal touch from local agents
– Enhanced with proptech tools
– Less flexibility compared to tech-driven options
Leveraging Technology– Efficiency and accuracy in transactions
– Streamlined processes
– Requires tech-savviness to fully benefit
Rental Properties– Potential for positive cash flow
– Long-term appreciation
– Management and maintenance responsibilities and market volatility.
Online Real Estate Investing Platforms– Higher potential returns
– Access to exclusive real estate projects
– Higher risk, generally illiquid, and requires thorough due diligence. 

Check Out These Platforms For Accredited Real Estate Investors

RSNSimple yearly return 25.25%
FundriseManages over $3 billion in equity
EquityMultipleTargets returns of 18% or more for individual projects.
YieldStreetReturned more than $2.1 billion to investors
CrowdStreetAverage IRR of 18.1%.
RealtyMogulTargets 6-9% in average annual cash distributions.
First National Realty PartnersTargets 12-18% average annual returns for investors.
AcreTraderMinimum yield of 3%-5% after fees.
Arrived HomesOver 225 homes in 39 markets and over $85 million in investments.
StreitwiseAverage dividend yield of 7.3% since 2020.
RoofstockOver 230,000 users who’ve received over $500 million in loan repayments.
GroundfloorOver 500,000 investors and a real estate portfolio worth roughly $175 million
SharestatesOver $1.72 million in total funding.
FarmTogetherTargets IRRS of 6-13%.
CadreRoughly $462 million gross distributions to investors

Get in touch with RSN Property Group now and discover the opportunities for accredited investors that can assist you in accomplishing your investment objectives. Collaborate with us to establish a thriving future for your property portfolio.

Frequently Asked Questions 

How can accredited investors leverage their status in the real estate market?

Accredited investors can leverage their status by participating in private real estate offerings that promise higher returns and diversification opportunities beyond the reach of traditional investment vehicles. These include direct property ownership, private equity funds focused on real estate, and debt investments. Their status also allows them to invest in projects with significant development potential or specialized markets, such as commercial or luxury residential properties.

What are some unique challenges accredited investors face in real estate investing?

Despite the attractive returns, accredited investors face challenges such as higher risk levels, longer investment horizons, and liquidity constraints. Real estate markets can be volatile, and the performance of private investments is heavily dependent on management expertise and market conditions. Additionally, these investments often require substantial upfront capital. They may not be easily sold or exchanged for cash without a significant loss in value.

Can technology play a role in mitigating some of these challenges?

Absolutely. Technology, especially proptech, is revolutionizing how accredited investors access and manage real estate investments. Platforms offering blockchain-based transactions can enhance liquidity by facilitating the tokenization of property assets, allowing for fractional ownership and easier exit strategies. AI and data analytics tools can provide deeper market insights, improve property management efficiency, and help better predict market trends, thus mitigating human error and market volatility risks.

Final Words

In 2024, the evolving real estate market presents accredited investors with unparalleled opportunities for growth and diversification. Blending traditional insights with technological advances, these investors stand at the threshold of new ventures, from enhancing local transactions with proptech to exploring the vast potential of online investment platforms. With the landscape demanding sharp decision-making and flexibility, the chance to chase high rewards also comes with notable risks. It’s all about confronting this terrain with a strategic and informed mindset that secures investments and sets the stage for remarkable achievements.

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