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BAM Capital Speaks Out On The Benefits of Being An Accredited Investor

BAM Capital, the private equity arm of The BAM Companies, an institutional real estate owner & operator from Indianapolis, has published a blog post that discusses the benefits of being an accredited investor. BAM Capital is using the blog post as an opportunity to educate and help accredited investors find the best real estate opportunities to invest in.

An accredited investor is someone who is considered “financially sophisticated” enough to buy unregistered securities. Unregistered securities are riskier because they don’t have the normal disclosures that come with SEC (Securities and Exchange Commission) registration. The assumption is that since accredited investors are considered cognizant and aware of the risks, they can handle purchasing unregistered securities. The purpose behind the strict regulations is to protect less-knowledgeable investors who may not have the financial cushion to survive high losses. The SEC, therefore, offers accredited investors the chance to invest in securities without having to contend with the regulatory disclosures that are reserved to protect non-accredited investors.

The requirements for becoming an accredited investor are related to the investor’s income, net worth, and professional experience. The designation of accredited investor may be assigned to both individuals and business entities. A person is considered an accredited investor if their net worth exceeds $1 million. This can either be cash on hand or liquid holdings. This can be achieved individually or jointly with their spouse. The person’s primary residence does not count as an asset in the calculation of their net worth. A company can become an accredited investor if it is a private business or an organization that has assets exceeding $5 million.

Accredited investors also need to have an annual income exceeding $200,000 for the last two years, with the same or higher expected income in the current year. For joint incomes, it must exceed $300,000. If an entity consists of equity owners who are considered accredited investors, it is also an accredited investor by extension. Readers can find out more about the requirements for being deemed an accredited investor by going through the accredited investor pdf on BAM Capital’s website.

Though there is a high bar to clear for achieving accredited investor status, it is not enforced by any central government regulatory agency or independent body. There is no specific “process” that individuals or entities have to go through in order to get accredited. There is also no certification exam or a document that shows someone has become an accredited investor. The responsibility of determining whether or not someone is qualified to buy unregistered securities falls upon the companies that issue them. Therefore, individuals who want to be accredited investors can simply approach the issuer of the unregistered securities and respond to their questionnaire. Investors might need to attach their financial statements and information of other accounts such as salary slips, tax returns, and W-2 forms, and even provide the company the permission to evaluate their credit report to assess any debts.

Apart from being legally authorized to buy securities that are not registered through the SEC and other regulatory authorities, accredited investors also have access to hedge funds, angel investments, venture capital, and deals that involve higher-risk investments and instruments. Accredited investors can avail of a world of opportunities to grow their significant wealth even further, provided they are fully aware of the risky nature of the bets that they are taking. Since accredited investors tend to commit to a few hundred thousand dollars or even a few million dollars to invest in unregistered securities, there is a chance that they may lose a lot of money in the process.

Inc 5000 winning BAM Capital specializes in the acquisition and management of income-producing properties, primarily multi-family apartment communities also known as multifamily real estate syndication. The company currently has 5,000 units and $700 AUM (Assets Under Management). The company focuses on B++, A-, and A multifamily assets to provide low-risk opportunities with lucrative assets. The company is appealing to high net worth individuals to find out more about what it can do for them.

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