How to Become an Accredited Investor and Explore the Benefits

Accredited investor status opens access to private offerings and income strategies that are not available to the general public. Investors qualify by meeting specific, well-defined criteria and as soon as accreditation status has been verified, they can then subscribe to an offering.

Why is this Important?

An accredited investor status is based on the idea that accredited investors are more financially sophisticated and have the financial means to bear the risks associated with these types of investments. This blog will cover the requirements and verification process for accredited investor status, and its benefits for investors in private real estate mortgage REITs.

Ways to Become an Accredited Investor

To qualify as an accredited investor, an individual must meet specific financial or professional criteria defined by the U.S. Securities and Exchange Commission (SEC) under Regulation D.

For Individuals

• Income test: You must have earned an individual income of over $200,000 for each of the two most recent years, or a combined income with a spouse of over $300,000 for the same period. You must also reasonably expect to earn the same level of income in the current year.
• Net-worth test: Your individual net worth must be over $1,000,000, or your combined net worth with a spouse must be over $1,000,000. This $1,000,000 figure excludes the value of your primary residence.
• Professional Criteria:
  • If you hold a Series 7, Series 65, or Series 82 license in good standing.
  • Directors, executive officers, or general partners of the company selling the securities.
  • Any "family client" of a "family office" that qualifies as an accredited investor.
  • For investments in a private fund,  “knowledgeable employee” of a private fund to invest in that specific fund.

For Entities

 Entities can also be considered accredited investors if they meet certain requirements:

• All accredited owners: Any entity where all equity owners are accredited investors.
• Large investment entities: An entity (for example, a corporation, LLC, or partnership) with more than $5 million in investments that were not raised solely for the purpose of investment.
• Certain financial institutions: Banks, investment companies, insurance companies, and other specific financial entities.

How to Prove Your Accredited Status

Begin by choosing the qualifying criteria that best suits you and is easiest to document. Inform the issuer of your chosen path so they can confirm the verification method before you submit any documents.

• If income: gather two years of W-2s, 1099s, or K-1s along with the most recent return. Prepare clean copies that clearly show your name and dates. A brief cover note that totals each year’s income can help reviewers process the file without follow-ups.
• If net worth: collect current brokerage and bank statements and authorize a credit report so liabilities can be confirmed. Make sure statements are recent and show account owner names and balances. Remember that primary residence value is excluded from the net-worth calculation.
• If you hold a qualifying license, make sure it is current and easy to look up. Share the license type and number, plus the exact name on the license. A quick screenshot or PDF from the regulator’s lookup page helps issuers verify status quickly.
• If you qualify as a knowledgeable employee, request a brief letter confirming your role and tenure from the fund’s manager. Ask that the letter state your position, that you participate in the fund’s investment activities, and that your tenure meets the required period. Keep a copy for future subscriptions.

Next, confirm how the issuer will verify your status. In Rule 506(c) offerings, issuers must take reasonable steps to verify every purchaser before a sale. Some will review documents directly. Some will accept a third-party verification letter from a CPA, attorney, or registered investment adviser. In certain situations, an issuer may rely on a high minimum investment paired with written investor representations when there is no contradictory information. Align on the method early so you provide the right items once and avoid repeat requests.

Why Accreditation Matters for Private Real Estate Credit

Accredited status lets you access private mortgage strategies that aim for current income from short-term, asset-backed loans. Many offerings under Rule 506(c) are limited to accredited investors, so meeting the standard and having your documents ready means you can review subscriptions, allocate capital, and start receiving distributions sooner when opportunities open.

It is important to work with experienced fund managers, such as Red Tower Capital, that originate, underwrite, and service loans on defined terms. Because portfolios recycle as loans pay off, accredited investors can evaluate new allocations more frequently without waiting for long operating cycles. If your goal is steady cash flow backed by real property, accreditation is the first step that unlocks those options.

Benefits of Being an Accredited Investor

The main benefit of being an accredited investor is gaining access to private investment opportunities not available to the general public. These investments often have a higher potential for returns and greater portfolio diversification.

• Get access to exclusive investment opportunities
• Potential for higher returns: Private placements often offer higher returns or yields and are less affected by market volatility.
• Portfolio diversification: Many alternative investments, such as Red Tower Capital’s RTC VI, are not correlated with the public stock and bonds markets. This can help buffer a portfolio against losses during market downturns.
• Networking and influence: Being an accredited investor can grant you access to an exclusive network of high-net-worth individuals, entrepreneurs, and fund managers.

This approach can help investors build a portfolio that emphasizes current income with clear terms and active servicing. Because each position is a loan secured by real property, investors have line-of-sight into how cash flows are generated and how principal is returned at payoff or maturity. As you evaluate managers, focus on the basics: sourcing, underwriting, servicing, reporting, and consistent communication with investors.

Why Investors Are Investing with Red Tower Capital

Since 2011, Red Tower Capital has built a consistent record of quality originating, underwriting, and servicing private real-estate loans. RTC has over a 10-year audited track record of high risk-adjusted yields, current income and asset-backed security, and historical investor returns of over 9+%.

Depth of team experience also matters. A leadership group with more than 60 years of combined industry background focuses on disciplined due diligence and underwriting to source and close quality loans despite competition.

Start Your Accredited Investor Journey

If you meet one of the qualifying investor criteria and want help choosing the simplest way to verify, contact one of our experienced Red Tower Capital team members today!

For strategy details, visit redtowercapital.com/invest/rtc-vi to see how a private mortgage strategy deploys capital into short-term, asset-backed loans, including how underwriting and servicing work.

If you plan to use retirement funds, review the steps and timing at https://redtowercapital.com/invest/self-directed-iras.

For quick reference on subscriptions and eligibility, scan the Investor FAQs at https://redtowercapital.com/invest/faqs.