Under SEC Regulation D, what is an 'accredited investor' and why does it matter for real estate syndications?

The SEC defines an accredited investor under Rule 501 of Regulation D as someone meeting income thresholds ($200,000 individually, $300,000 jointly for the past two years) or net worth over $1 million excluding their primary home, or holding certain professional certifications such as a Series 65 license. Most private real estate syndications, where a sponsor pools investor capital to buy larger commercial or multifamily properties, rely on Regulation D exemptions (Rule 506(b) or 506(c)) from full SEC registration. These exemptions restrict participation to accredited investors to ensure participants can bear the financial risk. Investors receive a share of cash flow, appreciation, and depreciation benefits proportional to their investment.