Proposed Investor Accreditation Change Would Democratize Real Estate Investment

Currently investor accreditation is only achievable for individuals “having a net income of over $1 million or more than $200,000 in net earned income during the last two years.” However, a recently proposed congressional change will allow investors to achieve accreditation by taking a test that proves their “financial savvy” administered by FINRA Financial Industry Regulatory Authority, a government-authorized not-for-profit organization that oversees broker-dealers. Current accreditation laws primarily limit real estate investment opportunities to institutional investors and high-net-worth individuals. A relaxation of the current criteria would significantly expand the capital pool available for developers and real estate companies, thereby opening the door to the flexibility to explore a broader range of projects from “affordable housing and green buildings to tech-integrated commercial spaces.” Furthermore, the recent stifling of real estate crowdfunding platforms that experienced a remarkable rise in the past decade could gain an influx of investors which would not only increase investment opportunities, but also support smaller, innovative real estate projects that might have been overlooked by larger institutional investors.