When a person begins exploring the investment world, a common phrase he or she will come across is “accredited investor.” To gain access to some of the best investment opportunities around, a person must be an accredited investor. But what does this term actually mean? In the US, to be deemed an accredited investor, one must have $200,000 in annual, taxable income ($300,000 for married couples) or have $1,000,000 in assets aside from one’s primary residence. Hedge funds, private equity, and venture capital firms can only accept money from accredited investors. The logic behind this law (Rule 501, Regulation D of the SEC) is that wealthy people have extra money to invest and potentially lose. While this law attempts to protect people with less income from incurring devastating losses, it also prevents astute investors with less capital to invest in some great opportunities.
For example, crowdfunding platforms for real estate such as www.realcrowd.com (read why we think investing with a sponsor you know and trust is better: here) offer prudent investments yet require investors to be accredited. But, don’t individuals making less than $200,000 dollars deserve access to great returns as well? Additionally, some wealthy people prefer not to reveal their personal, financial information and therefore do not wish to go through the process of accreditation. Because of these reasons, we have elected to operate our investment company as a 506(b) offering which exempts us from requiring our investors to be accredited. Menlo Atherton Developments is private and since we do not publicly advertise our deals, we can accept everyone interested in their financial future!