Accredited Investor - Owner Occ Rental for Net Worth?

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UnLearnYourself
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Accredited Investor - Owner Occ Rental for Net Worth?

Post by UnLearnYourself »

I see that the 'net worth' path towards being considered an Accredited Investor does not allow Equity in Primary Residence to be included. But what if the primary residence is an Owner Occupied 3 family? Could one count the % value of the 2 rental units toward this calc, or is the fact that the 3rd unit operates as 'primary residence' make this property ineligible entirely?
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Dale_G
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Re: Accredited Investor - Owner Occ Rental for Net Worth?

Post by Dale_G »

I'd include the value in net worth. But why would you want to be "an Accredited Investor"?

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SpaceX
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Re: Accredited Investor - Owner Occ Rental for Net Worth?

Post by SpaceX »

Dale_G wrote: Mon Jan 17, 2022 10:23 pm I'd include the value in net worth. But why would you want to be "an Accredited Investor"?

Dale
I think being the accredited investor does open up some opportunities in alternative investments such as commercial real estate (multifamily syndications for example with experienced operators, investing as a Limited Partner)
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HueyLD
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Re: Accredited Investor - Owner Occ Rental for Net Worth?

Post by HueyLD »

UnLearnYourself wrote: Mon Jan 17, 2022 10:34 am I see that the 'net worth' path towards being considered an Accredited Investor does not allow Equity in Primary Residence to be included. But what if the primary residence is an Owner Occupied 3 family? Could one count the % value of the 2 rental units toward this calc, or is the fact that the 3rd unit operates as 'primary residence' make this property ineligible entirely?
Per SECURITIES AND EXCHANGE COMMISSION 17 CFR PARTS 230, 239, 270, and 275

NET WORTH STANDARD FOR ACCREDITED INVESTORS

“ We believe that “primary residence” has a commonly understood meaning as the home where a person lives most of the time. Consistent with the approach in Regulation D to reduce unnecessary complexity, we are not adopting a definition of the term “primary residence.”

https://www.sec.gov/rules/final/2011/33-9287.pdf

As such, you live most of the time in one unit only, not the other two. You should be able to count the pro rata net value of the two rental units in your net worth for Accredited Investor purpose.
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Re: Accredited Investor - Owner Occ Rental for Net Worth?

Post by drk »

HueyLD wrote: Mon Jan 17, 2022 11:06 pm As such, you live most of the time in one unit only, not the other two. You should be able to count the pro rata net value of the two rental units in your net worth for Accredited Investor purpose.
It's funny because I read that as the opposite: the home is the property, so the accessory dwelling units would not count. But I don't think it matters because "accredited investor" status frequently comes down to self-attestation. Want to be one? Congrats!
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UnLearnYourself
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Re: Accredited Investor - Owner Occ Rental for Net Worth?

Post by UnLearnYourself »

SpaceX wrote: Mon Jan 17, 2022 10:31 pm
Dale_G wrote: Mon Jan 17, 2022 10:23 pm I'd include the value in net worth. But why would you want to be "an Accredited Investor"?

Dale
I think being the accredited investor does open up some opportunities in alternative investments such as commercial real estate (multifamily syndications for example with experienced operators, investing as a Limited Partner)
This. I like having lots of tools in my tool box and as many open doors as possible.
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UnLearnYourself
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Re: Accredited Investor - Owner Occ Rental for Net Worth?

Post by UnLearnYourself »

drk wrote: Mon Jan 17, 2022 11:15 pm
HueyLD wrote: Mon Jan 17, 2022 11:06 pm As such, you live most of the time in one unit only, not the other two. You should be able to count the pro rata net value of the two rental units in your net worth for Accredited Investor purpose.
It's funny because I read that as the opposite: the home is the property, so the accessory dwelling units would not count. But I don't think it matters because "accredited investor" status frequently comes down to self-attestation. Want to be one? Congrats!
Thanks! ;)

I've seen cases that require account statements, asset appraisals, and/or letters from CPAs to attest to the net worth calcs, so I'm assuming the process is a bit more formal than the honor system. In any case I'm in no rush to gain the status or invest in vehicles only available to such folks, just setting the framework to give myself the option if/when I come across interesting opportunities in the years ahead.
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