Are you an accredited investor looking to add greater diversification to your portfolio and potentially get higher returns? If so, we’ve compiled a list of the ten best investment opportunities for accredited investors. Some are available to non-accredited investors, so read on even if you’re not yet accredited.
The table below provides a summary of ten alternative investments, followed by more detailed descriptions of each:
| Platform | Investor Requirement | Minimum Investment | Asset Class |
Debt vs. Equity |
Fees |
|---|---|---|---|---|---|
| AcreTrader | Accredited only | $20,000 – $30,000 | Farmland | Equity | 2% upfront; 0.75% annually; 5% upon sale |
| Yieldstreet | Primarily accredited | $1,000 – $5,000 | Various hard assets | Equity | 1% – 2% annually |
| Fundrise | Mostly non-accredited | $10 – $100,000 | eREITs and eFunds invested in real estate | Equity | 1% annually |
| Cadre | Accredited only | $50,000 | Commercial real estate | Equity | 1% to 3.5% upfront; 1.75% or 2% annually |
| CrowdStreet | Accredited only | $25,000 | Commercial real estate | Equity | 0.5% to 1.0% annually |
| Arrived Homes | Non-accredited and accredited investors | $100 | Single-family homes | Equity | Up to 4.5% upfront, then 1% annually |
| RealtyMogul | Non-accredited and accredited investors | $5,000 to $25,000 | Commercial real estate | Equity and debt | 6% upfront; 5% annually |
| EquityMultiple | Accredited investors only | $5,000 and up | Commercial real estate | Equity and debt | 0.5% to 1.5% annually |
| HoneyBricks | Accredited investors only | $100 | “Tokenized” multifamily real estate | Equity | 0.05% – 0.20% transaction fee; annual management fee (not disclosed) |
| Roofstock | Non-accredited and accredited investors | 20% down payment on properties purchased | Single-family rental properties | Equity | 0.50% upfront; 2.5% on disposition |
Table of Contents
Best Investment Opportunities for Accredited Investors
1. AcreTrader
AcreTrader is unique in the accredited investor space because the entire focus of the platform is on farmland. As an investor, you’ll be participating in the purchase and ownership of working farmland. But you’ll be doing it through shares purchased in the farms.
As it turns out, farmland has proven to be a great long-term investment. This is partly because productive farmland is limited, but the global population is increasing. And with the current surge in inflation, food prices continue to rise. While it’s unfortunate for consumers, farmland investors stand to gain.
What’s more, farmland represents ownership in a “hard asset.” That can be a big advantage in a portfolio comprised entirely of financial assets. Your investment will provide both dividends paid out of the net rental income of the farm property, as well as capital gains upon disposition of the farm.
To invest with AcreTrader, you must be an accredited investor; there’s currently no capacity to accommodate other investors.
Investors must meet the large minimum investment requirement – $20,000 to $30,000 – and be prepared for the long haul. Expect to remain invested for five to twenty years in any particular property.
AcreTrader actively works to minimize risk by focusing on specialty farming – farms that produce high-value crops and typically have no or low debt. For more information, read our full AcreTrader review.
2. Yieldstreet
Yieldstreet is a diversified investment platform that allows you to invest in specialty asset classes, like real estate, fine art, and airplanes. Most of these opportunities are available only to accredited investors, though they offer their Yieldstreet Prism Fund to non-accredited investors. That fund invests in a mix of hard assets and pays quarterly dividends.
As accredited investments go, the minimum investment required is fairly low, at $1,000 or $5,000. $1,000 is the requirement for the Prism Fund and short-term notes. Individual offerings require $5,000.
Individual offerings enable you to select the specific assets you’ll invest in. For example, you can invest in various real estate deals, like single-family properties or multiunit apartment buildings. You can also invest in blue-chip art, commercial aircraft leasing, new commercial ships, commercial financing, and even legal offerings.
Meanwhile, short-term notes provide a relatively low-risk, low-reward place to park your money. There is no management fee, and the average holding period is three months.
Yieldstreet can also accommodate IRA accounts using a self-directed IRA (SDIRA), and their management fee of 1% to 2% per year is very competitive. In fact, short-term notes have no management fee at all.
The company is currently offering a bonus of up to $500 to investors to invest through the Wallethacks link. Check out our Yieldstreet review for more information.
3. Fundrise
You don’t need to be an accredited investor to invest with Fundrise. However, their Premium plan, which offers access to a wider number of “eREITs,” does require accredited investor status.
That said, Fundrise can be an excellent source of real estate investing for investors at all levels. It requires just $10 to begin investing with the Starter plan or just $500 with the Basic plan. But for more advanced investors, the Premium plan requires a minimum upfront investment of $100,000.
Fundrise uses two primary investment vehicles, eREITs, and eFunds. eREITs are non-publicly traded real estate investment trusts. Though they invest in real estate, like other REITs, they are only available on the Fundrise platform.
eFunds are similar, but they’re invested in single-family homes, townhomes, and condominiums. The fund will purchase a property, renovate it, then sell it for profit.
Using a mix of eREITs and eFunds, one of the four plans offered by Fundrise can provide supplemental income, long-term growth, or balanced investing that combines the two.
Fundrise offers another benefit. While most alternative investment platforms require you to maintain your investment position until it pays out, Fundrise offers limited early redemption of your investment every quarter. For more details, check out our full Fundrise review.
4. Cadre
Cadre focuses primarily on commercial real estate. That includes multifamily apartment complexes, as well as industrial, office, retail, and hotel space. It’s an asset class with higher reward and risk, which is why investors must be accredited.
Cadre uses a fundamental, value-driven approach when selecting investment properties. They target income-producing properties in major markets with strong fundamentals, like low vacancy and high rentals. The target markets include growth areas like Dallas, Atlanta, Seattle, Denver, and Washington, DC.
Once a property is acquired, Cadre improves its value through the innovative management and capital improvements. The company claims a realized net return on investment of over 18%.
Even though commercial real estate investments are notorious for being illiquid, Cadre offers a secondary market where you can dispose of your investments early. Though the returns expected require holding an investment until it’s completed, it’s possible to partially or entirely liquidate your position early.
Cadre offers an interest-bearing cash account, as well as their Direct Access Fund, which enables you to hold between 15 and 20 commercial properties across the country. Investors are paid quarterly income distributions. You can also invest directly in individual properties available on the platform. Read our full Cadre review for more.
5. CrowdStreet
CrowdStreet’s strength lies in its low fees. They charge an annual management fee between 0.5% and 1% of your portfolio value. The fees are kept low because other costs are paid by real estate developers rather than being passed on to investors.
But CrowdStreet investors need to have a significant amount of investment knowledge. That’s because the platform connects investors and project sponsors directly. They don’t act as a middleman, enabling investors to invest through funds or limited partnerships.
You can select properties to invest in through the CrowdStreet Marketplace. All the information you need will be presented with each property offered.
For those who would rather have a preferred investment management option, they offer their Blended Portfolio. It’s a fund that includes multiple property holdings from the marketplace specifically chosen for the fund.
Another CrowdStreet strength is its vetting process. Only 5% of the deals they investigate are offered on the marketplace to their investors. Each property is put through a rigorous analysis, which includes a thorough investigation of both the viability of the property and the history of the project sponsors. Learn more in our CrowdStreet review.
6. Arrived Homes
Arrived Homes is open to non-accredited investors, though accredited investors can also participate. The unique advantage of this platform is that you can invest in single-family homes. And you can do so with as little as $100, making it possible to diversify a small amount of money across multiple properties. (Though some properties may require a minimum investment of as much as $20,000.)
Arrived Homes enables investors to choose which properties they want to invest in from their online marketplace. Like other real estate crowdfunding platforms, they tend to focus their activity in areas with stronger housing markets, particularly the southeastern US.
Select the property, invest your money, and let Arrived Homes manage things from there. Like most real estate crowdfunding platforms, you’ll invest in individual properties through shares in a limited liability company (LLC).
The company targets properties likely to produce a positive cash flow from rents. The net income is distributed to investors every quarter. The capital gains on the investment will be distributed to investors when the property is sold, allowing investors to earn both regular income and capital appreciation.
Arrived Homes is available for both taxable investment accounts and self-directed IRAs. Read our full Arrived Homes review for more details.
Learn more about Arrived Homes
7. RealtyMogul
RealtyMogul is a real estate crowdfunding platform open to non-accredited and accredited investors. Like other platforms on this list, they allow you to invest in commercial real estate.
They offer real estate equity and debt investments, giving you access to both income and capital appreciation opportunities. For example, they offer an income REIT with a mix of real estate debt and equity, targeting an 8% annual distribution to investors.
There are a couple of caveats to be aware of with RealtyMogul. First, they have a higher minimum investment requirement than most real estate crowdfunding platforms designed for non-accredited investors. That includes a minimum of $5,000 for an income fund and $25,000 to invest in direct deals.
Second is the fee structure. RealtyMogul’s fee structure is somewhat complicated because it includes multiple fees at each stage. Upfront, a one-time fee of 2% is paid to the real estate company and 4% to the broker-dealer. That’s followed by a 5% annual fee, of which 4% of the property’s gross income goes to the property management company and 1% to RealtyMogul.
Neither of these drawbacks means RealtyMogul is a bad investment. But you should know exactly what you’re getting into before investing money. Read our full RealtyMogul review.
8. EquityMultiple
EquityMultiple is one of the most popular real estate crowdfunding platforms available. Though it’s exclusive to accredited investors, it has a lower initial investment requirement (starting at $5,000) and lower fees (0.5% to 1.5%) than most competing platforms that cater to accredited investors.
EquityMultiple investments heavily favor debt, including senior and mezzanine debt. But they also offer preferred common equity, as well as some unique investment opportunities, like investments in 1031 exchanges and opportunity zones. The combination of investment offerings can produce a higher combined return between regular investment income and capital appreciation.
For investors who prefer a lower-risk investment vehicle, EquityMultiple offers an evergreen fund that invests strictly in short-term notes. The fund provides lower returns than other investments on the platform but with much less risk due to shorter durations.
They do offer a more flexible investment time horizon. For example, short-term notes mature within 3 to 9 months, while senior debt can run between 9 and 24 months. But investments in common equity can require up to seven years, while opportunity zone investments require ten years or more.
The investments are illiquid since there is no secondary market for early liquidation. However, it may be possible to exit a position early by selling your shares to another investor through a private transaction.
You can open a taxable investment account or an IRA through an EquityMultiple IRA partner, though that will require a minimum investment of $10,000.
Learn more about EquityMultiple
9. HoneyBricks
HoneyBricks is a newcomer in the real estate crowdfunding space and is currently open only to accredited investors. They take a unique approach to real estate investment, offering investors tokens as shares of ownership in the company’s non-publicly traded REIT.
In theory, tokenization should make buying and selling REIT shares quicker and easier. The company advertises the ability to liquidate tokens instantly, though that’s not possible for the first 12 months of ownership. HoneyBricks does offer a secondary market in the tokens, which can be sold to other investors on the platform.
You can create an account in as little as two minutes, then purchase tokens on the HoneyBricks marketplace. Tokens can be purchased using fiat currency, cryptocurrency, or staking your existing crypto. You can invest through a crypto wallet. The tokens will give you ownership in the REIT, which is fully managed by their investment team. Investors can expect dividend distributions and capital gains as properties are sold.
HoneyBricks invest in multifamily properties located in high-growth areas, like the southeast. Only about 1% of properties analyzed are selected for investment purposes. They offer four different investment strategies, ranging from rental income with limited growth to capital growth with limited income. As net rental income is earned, it’s transferred into your crypto wallet using USDC. Returns are projected in the 7% to 20% range. Learn more about tokenized investing in our HoneyBricks review.
10. Roofstock
Roofstock is a real estate crowdfunding platform focused on investing in single-family properties. The platform is available to both accredited and non-accredited investors.
You’ll choose single-family properties from the Roofstock marketplace. Most properties offered are leased to existing tenants. Each property will have a description that includes the sale price, market rent, valuation, capitalization rate, expected return, address, and property description.
Since you’ll be invested in individual properties, you’ll need to make a down payment of 20% of the purchase price. Even though accredited investor status is not required, this platform does require more upfront capital than most others.
But Roofstock is light on fees, charging only 0.50% upfront and 2.5% on the disposition of the property. Meanwhile, it offers the most direct way to take ownership of investment-quality single-family rental properties. Read our full Roofstock review for more information.
What Is an Accredited Investor?
An accredited investor is a recognized financial profile. According to the US Securities and Exchange Commission (SEC), accredited investor status requires the following:
- Net worth over $1 million, excluding your primary residence (individually or with spouse or partner.)
- Income over $200,000 (individually) or $300,000 (with spouse or partner) in each of the prior two years and an expectation of the same for the current year.
- Holders of certain licenses to sell securities, officers or partners in organizations selling securities, and other qualified individuals.
When signing up for an investment platform requiring accredited investor status, you’ll generally be asked to self-certify by attesting to your qualifications based on the above criteria. However, a growing number of investment platforms are requiring investors to submit documentation proving accredited investor status.
What Types of Accredited Investments are Available?
Accredited investments are generally those not available through general investment platforms. Those platforms commonly offer stocks, bonds, options, funds, and many other widely available investment securities.
Accredited investor status is required when investments are out of the ordinary and involve greater risk. That can include large upfront investments, a long investment time horizon, and the possibility the investment will fail.
Common accredited investments include preferred equity investments, syndicated debt securities, non-public REITs, startup capital, and other non-typical investments.
What Are the Benefits of Accredited Investments?
There are two primary benefits to accredited investments:
- Diversification. Investors can add asset classes to their portfolios to diversify beyond regular financial assets, like stocks and bonds.
- High returns. Accredited investments hold the promise – but never the guarantee – of providing high double-digit returns.
Investors may also choose accredited investments because they offer an opportunity to participate in unique ventures. An example is providing capital for startup companies or so-called angel investing.
What Are the Risks of Accredited Investments?
Along with the promise of diversification and high returns, accredited investments come with substantial risks.
The most obvious is that you could lose some or all your investment. And because many accredited investments are unique deals, there may be little or no liquidity if you want to exit your position early.
But perhaps the biggest risk is that alternative investments tend to be unique. You’ll participate in individual deals that are not available on recognized exchanges. Many are not regulated by regulatory authorities, so it’s important to do your due diligence before investing in any investment of this type.
How Much Should I Invest in Accredited Investments?
Because of the risks associated with accredited investments, they should occupy only a small corner of an otherwise well-balanced portfolio. For most investors, that will mean limiting a position in accredited investments to a single-digit percentage of your total portfolio.
Bottom Line
Accredited investments are high-reward/high-risk ventures, which is why accredited investor status is required in the first place.
But as long as you’re aware of the risks and prepared to absorb potential losses, the benefits of diversification and above-average returns can make these investments well worth at least a small position in your portfolio.
Just be sure to limit your investment activities only to ventures you understand. Just because you qualify as an accredited investor doesn’t mean any particular investment is right for you.
The post 10 Best Investment Opportunities for Accredited Investors appeared first on Best Wallet Hacks.
from Best Wallet Hacks https://ift.tt/SAeE0CB
Comments
Post a Comment
We will appreciate it, if you leave a comment.