Best Investment Opportunities for Accredited Investors

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Contributor, Benzinga
October 5, 2023

If you're looking to build and diversify your investment portfolio, consider investments from commercial real estate to farmland, wine or fine art. As an accredited investor, you have the opportunity to allocate a portion of your portfolio to more speculative asset classes that offer diversification and the potential for high returns. Considering new opportunities? Check out the accredited investor opportunities below that have shown strong historical returns here. 

Quick Look: Best Accredited Investor Opportunities

Best Accredited Investor Opportunities

If you're an accredited investor looking for new opportunities, consider the following diversified investment opportunities.

1. Best for Diversified Investing App: Yieldstreet

Yieldstreet specializes in investments in real estate, legal settlements, art, financial instruments and shipping vessels. Yieldstreet is one of the best real estate investing apps for investors interested in real estate and alternative investments who have a high net worth, with offerings for accredited and nonaccredited investors. You can create a custom Yieldstreet portfolio for a minimum investment of $10,000 across various asset classes as an accredited investor.

Pros

  • Easy to use
  • Various investment options, including alt investments
  • Good customer support
  • Accredited and nonaccredited investor options 

Cons

  • High fees 
  • High-risk investments
  • Requires expertise to earn
  • Investments are highly illiquid

2. Best for Institutional Real Estate: RealtyMogul

RealtyMogul is a real estate investing app specifically for buying and selling commercial real estate. It's ideal for accredited investors interested in earning regular returns from non-traded public real estate investment trusts (REITs). RealtyMogul connects investors to institutional-level real estate investments, with a minimum initial investment of $5,000.

Pros

  • Diverse commercial real estate options
  • Low fees
  • Due diligence on each investment 
  • Automatic features
  • Offers IRAs 

Cons

  • Higher minimum investment
  • Highly illiquid investments
  • Auto investing only for accredited investors

3. Best for Farmland Investments: AcreTrader

AcreTrader offers investors the opportunity to buy shares of farmland. Farmland is historically one of the world’s most appreciating and stable assets. AcreTrader extensively vets all properties and is responsible for the rental payments, insurance, taxes, property maintenance and all other management. You can start investing in farmland for between $10,000 to $40,000. The average cost is between $10,000 to $25,000.

Pros

  • Vetted farmland investment
  • Appreciating asset value
  • Low fees
  • All management is covered by AcreTrader
  • Option to earn passive rental income
  • Possible protection against inflation  

Cons

  • High minimum investment
  • Locked into the investment for a minimum of five to 10 years
  • Limited number of properties 

4. Best for Art Investments: Masterworks

Masterworks allows investors to own fractional shares of fine art. Masterworks gives you the option to diversify your portfolio and invest in blue-chip artwork while potentially earning profits from 8% to 30% or more. Art has been a strong historical hedge against stock market volatility. With a minimum investment of $15,000, Masterworks can be a good option for accredited investors looking to diversify their portfolios. 

Pros

  • Historical annualized returns of 9% to 39%
  • Leading research team to analyze art’s performance against other asset classes
  • Pre-vetted artists and artwork
  • Artwork is insured 
  • Art stored in secure facilities

Cons

  • Art world is unregulated
  • Phone interview required before you start investing
  • No cash flow until you sell 
  • Higher fees 

5. Best for Wine Investments: Vinovest

Vinovest offers accredited investors the opportunity to invest in fine wines. Vinovest is the first online platform designed to provide easy access to wine as an investment asset, with a low minimum investment of just $1,000. This opportunity comes with all the benefits of other alt investments on the list, such as diversifying your portfolio to protect against stock market volatility. Vinovest has shown profits of 10% to 13% annually in the past. 

Pros

  • Low minimum investment
  • Strong historical returns
  • Fine wine is insured and stored in secure facilities 
  • Easy-to-use app 

Cons

  • High fees
  • Long-term investments of 20+ years needed to earn high profits 
  • Minimal information on wines available

6. Best for Rental Home Investments: Arrived Homes

Arrived Homes offers accredited and nonaccredited investors the option to buy and sell single-family residents and vacation rental properties with an ultra-low minimum investment of just $100. The platform's simplified investing process and accessible platform are a definite plus. Arrived homes charge a 3.5% to 5% sourcing fee, 0.15% AUM and 5% gross rents fee.

Pros

  • Low minimum investment of just $100
  • Accredited and nonaccredited investors can participate
  • No personal liability for investors
  • Property managers handle the management
  • Passive rental income

Cons

  • Limited selection
  • Minimum holding period of 5 to 7 years 
  • No ​​robo-adviser or access to human advisers to guide investment decisions

7. Best for Commercial Real Estate: EquityMultiple

EquityMultiple is a real estate crowdfunding platform for accredited investors that gives you access to professionally managed commercial real estate. The minimum investment is $5,000, making it comparable to RealtyMogul. However, EquityMultiple offers a better selection of institutional-level real estate, equity and senior debt investments.

Pros

  • Possible high rates of return
  • Access to high-quality commercial real estate investments
  • Easy-to-use website
  • Portfolio diversification 
  • Strong returns

Cons

  • High investment minimum
  • Complex fee structure varies by investment

What is an Accredited Investor?

An accredited investor has a special status under financial regulation laws. Each country defines specific requirements and regulations to qualify as an accredited investor. Usually, accredited investor status is granted by meeting income, net worth, asset size or professional experience requirements. 

For example, accredited investors in the U.S. must satisfy at least one requirement regarding their net worth or income, asset size, governance status or professional experience. This requirement includes high-net-worth individuals (HNWIs), brokers, trusts, banks and insurance companies. 

The U.S. Securities and Exchange Commission (SEC) defines the term accredited investor under Regulation D. Accredited investors are financially sophisticated individuals or companies with reduced need for protection from regulatory disclosure filings. 

How to Become an Accredited Investor

The idea of designating accredited investors is that these individuals are considered financially sophisticated enough to bear the risks. Sellers of unregistered securities may only sell to accredited investors. Unregistered securities are inherently riskier because they aren't required to provide the normal disclosures of SEC registration. 

To become an accredited investor as an individual, you must meet income or net worth criteria, such as an average annual income over $200,000 or $300,000 with a spouse or domestic partner. You could also become an accredited investor if you work in the financial industry. 

To meet SEC requirements to become an accredited investor, you must meet one of two criteria:

Income: Have a gross income exceeding $200,000 in each of the two most recent years or joint income with a spouse or partner exceeding $300,000 for those years. You must also reasonably expect the same income level in the current year.

Net worth: A person whose net worth exceeds $1 million, excluding the primary residence. The net worth may be combined with a spouse or partner. 

You could also meet SEC professional criteria. Learn more on how to become an accredited investor here

Types of Investments for Accredited Investors

A number of investment options for accredited investors, from crowdfunding and REITs to hard money loans. Here's what you can consider.

Crowdfunding

Crowdfunding is an investment opportunity growing in popularity in which a company, individual or project seeks to raise necessary capital online. This opportunity is facilitated by online crowdfunding platforms. 

As an accredited investor, you can also consider equity crowdfunding platforms, which offer the opportunity to obtain a share of a company or project. Consider opportunities from real estate crowdfunding to tech startups for potentially high returns. 

Real Estate Syndication

Real estate syndication involves a group of investors combining capital and resources to purchase a larger property such as an apartment complex, mall or other larger commercial investment. Accredited investors can look into the real estate syndication structured by a syndicator. The role of the syndicator is to scout and secure properties, manage them, and connect investment contracts or pair investors. This process simplifies real estate investment while offering accredited investors excellent investment opportunities. 

REITs

REITs pool and oversee funds invested in various real estate properties or real-estate-related activities such as mortgages. While there are REITs available to nonaccredited investors, accredited investors have greater opportunities to access private or non-traded REITs. 

Hedge Funds

Hedge funds can offer accredited investors exclusive investment opportunities. Hedge funds are professionally managed by career investors, but they’re under less regulation and scrutiny than exchange-traded funds (ETFs) or other funds. Hedge funds may be able to invest in asset classes that are more unique or sophisticated than regulated funds, offering investors the potential for greater returns. 

Venture Capital

Venture capital is private equity financing for startup, emerging and early-stage companies with high growth potential or demonstrated high growth. Accredited investors choose venture capital for strong growth opportunities and to put capital into emerging companies that show strong potential or align with investors' beliefs.

Convertible Investments

Convertible investments are financial securities that can be converted into common stock for a predetermined price. Convertible investments are a hybrid security that combines debt and equity features, blending elements of stocks and bonds to offer potential appreciation opportunities while safeguarding against loss. The value of this opportunity for accredited investors is that they have the potential to appreciate in value over time. 

Private Equity Real Estate

Private equity real estate refers to the practice of investing in professionally managed funds that could invest in speculative property offerings from undeveloped land to new luxury high-rises. Private equity real estate encompasses private equity, private debt, public equity and public debt. Accredited investors can invest individually or in a private equity real estate fund. 

Interval Funds

An interval fund is a closed-end fund. Shares are not typically traded, but instead, the company periodically extends offers to repurchase shares, typically every 90 to 180 days. Accredited investors use interval funds to diversify their financial portfolio or for regular opportunities to divest themselves of their holdings at a profit. 

Hard Money Loans

Hard money loans are short-term loans by individuals or private companies who accept an asset or piece of property as collateral. In the case of hard money loans, if a borrower defaults on the loan, the lender can assume ownership of the asset to recoup their losses. Accredited investors may consider offering hard money loans for the opportunity to charge higher interest rates and high potential returns. 

Diversifying for Accelerated Growth

The investment opportunities here offer accredited investors the opportunity to invest in responsibly managed companies with some offerings that have outpaced major markets such as the S&P 500. Whether you should invest in these opportunities depends on your financial goals, portfolio diversification and investment horizon. Learn more about alternative investment platforms here. 

Frequently Asked Questions

Q

Can a nonaccredited investor invest in a startup?

A

Yes, a nonaccredited investor could invest in a startup through some formats. For example, a nonaccredited investor could participate in crowdfunding with as little as $10.

 

Q

How much do accredited investors make?

A

How much accredited investors make from their investments depends on investment strategy and overall portfolio. However, to become an accredited investor, individuals need to make more than $200,000 a year.

Q

What can accredited investors invest in?

A

Accredited investors can invest in more speculative investments from hedge funds to private equity or venture capital and startups. 

 

Accelerate Your Wealth

Arrived Homes allows retail investors to buy shares of individual rental properties for as little as $100. Arrived Homes acquires properties in some of the fastest-growing rental markets in the country, then sells shares to individual investors who simply collect passive income while waiting for the property to appreciate in value over 5 to 7 years. When the time is right, Arrived Homes sells the property so investors can cash in on the equity they've gained over time. Offerings are available to non-accredited investors. Sign up for an account on Arrived Homes to browse available properties and add real estate to your portfolio today.

About Alison Plaut

Alison Kimberly is a freelance content writer with a Sustainable MBA, uniquely qualified to help individuals and businesses achieve the triple bottom line of environmental, social, and financial profitability. She has been writing for various non-profit organizations for 15+ years. When not writing, you will find her promoting education and meditation in the developing world, or hiking and enjoying nature.