Look for offering exemption, verification process, household or entity test, and whether primary residence equity was excluded.
Plain-English term
Accredited investor
A regulatory investor-status category based on income, net worth, licenses, or entity tests.
Definition that survives review
For individuals, common tests include income over $200K individually or $300K jointly, or net worth over $1M excluding a primary residence. In a real review, translate the term into the cash flow, priority, deadline, tax treatment, status test, or control right it changes.
Use it to understand access and verification, not suitability. If you cannot point to the exact document or calculation behind it, you have recognized the vocabulary but not yet understood the deal.
Why it matters
Accredited means the rule says you may be allowed in. It does not mean you understand the deal, deserve the risk, or suddenly became sophisticated. This is why the term is not finished until you know who calculated it, what period it covers, and what happens if the friendlier definition is wrong.
A useful glossary entry should show where the word appears, what input changes it, and which connected term changes the answer next: 506(b), 506(c), Syndication.
How to use it in diligence
Common individual tests: income, net worth excluding primary residence, or certain professional licenses.
A $1.2M net worth can fail the test if most of it is home equity. The rule is not impressed by vibes.
Accredited status is permission to see certain offerings, not proof that the investment fits you.
Proof checklist
- The source period, calculation basis, and owner of the number are named.
- The term reconciles to the PPM, operating agreement, lender documents, tax schedule, underwriting model, or verification record.
- The downside version is visible before the optimistic version gets trusted.
Example, trap, question
A $1.2M net worth can fail the test if most of it is home equity. The rule is not impressed by vibes.
Accredited status is permission to see certain offerings, not proof that the investment fits you.
- what verification is required and why the offering is structured that way. Compliance is boring until it saves everyone.
- What source document, schedule, or third-party evidence proves this term in this specific deal?
- Which connected term changes the answer next: 506(b), 506(c), Syndication?
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