In this video.
I'm going to tell you guys what an accredited
investor is, the definitions
thereof, why the regulations even exist
with regards to limiting investments
to accredited or not accredited those kinds of
means.
Well, it's going on YouTube.
My name is Matt Faircloth,
and my company is called the DeRosa Group,
and we are a real estate company
that they cater to transforming lives
through real estate.
Now, this video is a definition video,
and it's about something
that a lot of folks that we work with
in the investment world and the people
that are looking to invest in real estate
want to know about, and that is the accredited
investor status.
It's important to note that if you're
considering buying into a security
that requires that people be accredited,
you don't have to go send in your tax returns
and you choose and your proof of income
or whatever to the issuer of the security.
You have to send them any of that stuff.
There is a verification process
that is third party verify if any syndicator
see your tax returns and those kinds of things.
You don't need to send that to them.
There should be there should be a
third party, whether it's your CPA,
your financial advisor, that knows the inner
workings of your finances.
There's also third party sites
like Verify Investor.
Ecom is one that we use you uploading your things.
That's all confidential and you'll issue
an accreditation cert back to the syndicator.
The reason why we know about this
kind of thing is the DeRosa Group.
Our company
offers syndications, apartment buildings,
real estate investments, those kinds of things.
And a lot of those investments that we offer
require folks have an accredited
investor status to invest with us.
Not everything that we offer does,
but a lot of things do as do a lot of other things
in the market that people can invest in
that are typically unregistered
in security investments.
And we'll get into what that is,
and that's how we know about it
because we hear more about us go to DeRosa
group dot com accredited investor.
This is a term that was defined
by the SCC, the Securities and Exchange Commission
to a certain investor status right through
so certain investors are credited, certain or not.
There's not like a badge or a certificate
or a diploma on your wall or whatever it is
you get when you're an accredited investor.
Not or not
there are just certain credentials
you have to meet
and you to be one of them
to become an accredited investor.
So let's get into what those are.
I should note that Investor
OPIA is a phenomenal site,
not affiliated with them, but that is where we get
a lot of our definitions that we send to people,
and their definitions are very clear and concise.
The first hurdle that you can meet to be
an accredited investor is income,
and that's earned income, meaning
like income from a job or passive investments.
All those kinds of things
can be considered earned income.
What doesn't qualify as earned
income is capital gain.
So let's say you made an own $300,000
selling your house one year
and then $400,000 selling
a bunch of vacation properties the next year.
Those are that's capital gains, not earned income.
The cashflow you make off those rental properties
does count towards earned income.
But earned income is
are things like your job
cashflow, dividends, those kinds of things.
The earned income hurdle as an individual
is $200,000
per year over the last two years
or $300,000 if you are filing jointly
with a spouse and if you're going to qualify
for the 200,000
in year one, you can't lump in
your spouse's income and qualify
under $300 in the year two
it has to be two years
of 200,000 individually or two years
of 300,000 of joint income with your spouse.
It has to be one or the other to qualify
for the income requirement
for accredited investors.
So it can be that or it can be off of net worth.
Net worth is adding up the value
of everything you own cars in your cash
and your in your bank account
and your retirement account.
And a lot of people forget that
by the way, retirement
account goes towards your net worth calculation.
One thing you can't count as an asset is your home
Some would argue, including my my friend
Robert Kiyosaki, would argue
your home is not an asset anyways.
You should be counting it to begin with.
But if you add up everything you have
and take away
any debt that you have on that thing
that could mean you own a rental property
that's worth $300,000,
you owe 250,000 on it.
So that means 50,000
goes towards your net worth
for that specific asset add all those things up,
and if it adds up to more than a million
and you and your spouse can throw all your both
your assets together,
you and your spouse's checking accounts,
retirement accounts, all those things,
and if that equals more than $1 million,
then you are accredited.
So income, as I said
before, or net worth,
the third one is a little less
common is if you're a general partner
or an owner of the company issuing the securities.
So if my company issues a security to buy
an apartment building, which we do regularly,
I can invest in that apartment building
whether I'm accredited or not,
because I am a general
partner or an officer in the company.
So it's important to note if your company, an LLC,
that you are controlling
is issue, is offering and issuing
a security,
you do not need
to be accredited to invest in it
because you're an operator of the company.
Now, the fourth one, it's not as common,
but it does play
as people that have certain professional
certifications, investment advisors,
those kind of folks that have things
like 37 licenses and stuff like that.
Look on that investor appealing.
That's in the description.
If you, if you believe you qualify
through a Series seven license
you have over a series
85, you can double check to make sure
that that gets you qualified as well.
So those are the four once revealed again
income 200,000
individually 300,000 married or net
worth over a million or
working as a general partner
if you of the company issuing the shares of this
of what's being bought and the fourth one
is those with certain professional
certifications currently that's just
financial advisors of the.
Let's talk briefly
why the SEC requires
that there
is no such thing as an accredited investor
when you're buying something like a like
a share of real estate or share an oil site.
And there are many many
other things that are accredited sometimes IPO
those are accredited requirements
things like that
is because these are non-registered
securities meaning like what we offer
the DeRosa group shares of an apartment building
they're not publicly traded.
We're not a rete,
we're a privately traded security.
It is something that we have to make the SEC aware
that we are exempt from registering with the SEC.
As something that's that's
something that FINRA would regulate
or that would become traded in a public
a lot of public platform or something like that.
We're not that we are exempt
and we're exempt because
we're only going to sell to accredited investors.
Now we can sell to just accredited
if we're going to solicit
meaning like I can shout it
from the mountaintop, I have a deal.
Invest in my deal.
That's called solicitation.
You can get on social media.
You can do that in newspaper ads.
And there you see companies investing in
or soliciting investors
in ads and things like that.
But it's only for accredited investors.
They can solicit meaning, you know, paid marketing
or go to people they don't know and offer this up.
If you only are going to offer your
your investment up to accredited investors,
then you're allowed to solicit
and you are exempt from registering
your syndication with your deal,
whatever your security with the SEC.
If you're going to offer
to people
that you have a preexisting relationship
with, like my Uncle Charlie,
my Aunt Susie,
my next door neighbor, people that I already know
and trust me and know me in their network,
then I don't have
to register with the SCC either
and they don't have to be accredited.
So that's called A five or six B offering.
The prior one that I was talking
about with solicitation and accredited
only is a five or six C look at like five or six
be standing for B for Buddy
those are your buddies,
your your friends, people that you have
a preexisting relationship with.
It is even more regulated.
The paperwork's a lot more.
You can do it and you can be exempt with the SCC
if you meet the criteria that's listed
with the on the SEC's guidelines.
And I should also to state
right now that I'm not an attorney
or SCC advisor.
I'm just syndicator that has offered
these types of things on a regular basis.
There is other five or six offerings.
There is a five or six.
Eight is a reggae plus.
There's this there's at the bottom line
guys if you get your advice me,
you shouldn't
be getting advice from your neighbor Johnny.
You shouldn't get your right.
You should be getting your advice from Google.
There are great attorneys
out there that you guys should hire
that if you're looking to offer a security,
something that is available
for people to buy as an investment in a vehicle,
then you should talk to an attorney
about setting yourself up properly
with the proper exemption, proper
document Asian proper I's dotted t's crossed
with the federal SCC and there's also state run
sex for every state and union
from where your investors may be from.
The good attorneys know
what needs to happen with regards to those entities
and what needs to be in your offering documents
and all that fun stuff.
So do not try this at home without an attorney
helping you guys out again.
If you're an accredited investor
or if you meet the criteria
is that I said congratulations,
the world is open to you with regards
to what you can invest in
is a lot of options out there that you have
just because
somebody is offering and what they present
to be an accredited offering
does not mean that they're a great syndicator.
Just means that they know the rules enough
or they have a good lawyer in their corner.
You still need to
do your due diligence on that offering
to make sure it looks right
for you and meet your investment goals.
And if you're not quite accredited yet,
there are offerings out there.
You got to
establish yourself a preexisting relationship
with someone who does offer these types
of securities on a regular basis,
but offers them up to their inner core network,
and that so become part of their inner core
network, become part of their offering based on
when you have something
that you had, that preexisting
pre-established preexisting relationship
with them,
that you could be on their offering base.
Before we know it, you build up your assets
and your net worth
will it will rise up and up and up and you'll
become accredited.
And you can offer up and offer up yourself
as an investor into larger offerings as well.
Rest assured,
the SEC is very quickly changing these rules.
They're antiquated.
The rules that I'm talking about
here are some were written in 1933.
These rules are becoming outdated.
They're changing.
The JOBS Act changed
a lot of these things
it just the whole accreditation thing
altogether and maybe making the old
accreditation thing go away until then
it's still here.
This is important
to know whether your credit or not
along with the definition but you know me
I get carried away in
and in chatting about this kind of stuff
with you guys.
I hope this is a value if you're accredited
and you're
looking for places
to look for more places to invest
or if you're not
accredited you want to learn from us,
check us out of device or group dot com either one.
We'd love to hear
from you guys in chat with you further.
It's important to note that if you're
considering buying into a security
that requires that people be accredited,
you don't have to go
send in your tax returns and your W-2s
and your proof of income or whatever
to the issuer of the security Europe.
Send them any of that stuff.
There is a verification process
that is third party verified.
That's what I got for you guys.
Make sure you check out more videos here on this
YouTube channel to hear more about
real estate investing and all the cool stuff
that we do, education and investments,
all the cool stuff that we're up to,
I've gotten probably.