“I would love to get involved with your projects, but I don’t know what an accredited investor is!” In working with Canadians looking to invest in real estate, GrowthShores Capital only works with business owners, doctors, and other professionals who are “accredited investors”. Often, Canadians who are accredited investors don’t even realize it, nor do they realize the investment doors that having this accreditation can open for them. So, understanding the concept of accredited investors is crucial. Accredited investors, which can be individuals or entities, hold a special financial status. This status grants them access to investment opportunities not available to the general public. In this blog post, we’ll delve into what accredited investors are, why they matter in real estate, and how the criteria for accreditation impact investment choices.
Accredited investor: What does this mean for Canadians?
We’ll focus on the accredited investors that are individuals, although they can be entities and institutions. By being an accredited investor, you have access to investment opportunities, such as real estate investment opportunities, that are not normally available to the rest of the public.
Individuals are considered accredited investors in Canada if they meet any of the following criteria:
Income Threshold: An individual qualifies as an accredited investor if their before-tax income exceeds $200,000 for at least two consecutive years (or $300,000 if combined with a spouse). This income level demonstrates financial sophistication and the ability to handle riskier investments.
Net Worth: Alternatively, an individual (alone or with a spouse) with net assets exceeding $5 million qualifies as an accredited investor. These assets include investments, real estate, and other financial holdings but NOT a primary residence.
Aggregate Financial Assets: An individual who beneficially owns aggregate financial assets (before taxes but net of related liabilities) exceeding $1,000,000 also meets the accreditation criteria.
Registered Professionals: An individual registered in Canada as a dealer or adviser under securities legislation qualifies as an accredited investor.
Why do accredited investors matter in real estate?
Access: Accredited investors gain access to real estate opportunities that are typically unavailable to non-accredited individuals.
Private placements: By participating in these private placements, accredited investors can diversify their portfolios.
Leverage and tax advantages: Real estate investments can offer benefits like predictable cash flow, steady returns, and tax advantages. Accredited investors can use their financial wherewithal to take advantage of these benefits.
Impact: Investment opportunities
Being an accredited investor significantly impacts what your investment landscape looks like:
High-return real estate: Accredited investors can explore real estate projects with higher potential returns.
Risk tolerance: Accredited investors normally have a higher risk tolerance, which means they consider strategies that non-accredited investors may consider higher risk.
Exclusivity: Accredited investors participate in exclusive real estate deals, such as off-market opportunities.
Increased diversification Accredited investors, because they have access to a different type and variety of deals, can diversify their investments more effectively.
Next steps for accredited investors
As business owners, doctors, and other professionals who want to invest in real estate in Canada, being an accredited investor means access to real estate investments not available to the general public. This means opportunities that can positively impact current and future financial goals.
And, of course, consulting with your financial advisors and exploring projects that match your investment goals as well as your risk tolerance, is key.
To learn more about how GrowthShores Capital works with accredited investors, please Contact Us to get started.
