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In our latest real estate tech entrepreneur interview, we’re speaking with Vin Vomero from Foxy AI.

Who are you, and what do you do?

Vin Vomero, founder and CEO of Foxy AI. I am a former real estate developer turned tech entrepreneur.

When an appraisal came in lower than expected, I began to research other ways of valuing property. That’s when I came across Automated Valuation Models (AVM), think Zillows Zestimate. I learned that one of the main drawbacks to an AVM, which leads to inaccuracies in value, is they don’t take into account the condition of the property. I had an “Aha” moment. I could use neural networks to turn property photos into data on the condition of a property and improve the accuracy of an AVM.

Ultimately this idea grew into a grand vision to fill a gap in missing information for the real estate market. They say “A picture is worth a thousand words,” and yet until now, we didn’t have a way to extract this data from the picture. Foxy AI builds Visual Property Intelligence tools to unlock the hidden value of real estate photos.

What problem does your product/service solve?

Real estate professionals have been making critical decisions missing essential visual property information. Using Foxy AI’s Visual Property Intelligence tools, you can increase efficiency, generate new insights, and sharpen the accuracy of Automated Valuation Models (AVM).

We have made our tools available to everyone, and as a result, many problems are being solved by a wide variety of companies. From valuation modelers and appraisers to listing aggregators, data aggregators, investors, and mortgage field service providers, they each have their own exciting and unique use cases for our tools.

The most popular tool is our condition scoring application. Countless hours are wasted, and untold amounts of money are left on the table because we could not accurately and consistently determine the condition of the property. Now, using artificial intelligence, we have the ability to assess the condition of the property automatically, at scale, using property photos.

What are you most excited about right now?

As we make new partnerships to set ourselves up for growth in 2020, what excites me most is working with our customers to collaborate on new tools and features. We are heavily focused on relationship building for the long term.

Recently, our intern put together a fun Chrome extension that allows users of Redfin to score the condition of a property they are viewing. This helps the average consumer objectively compare properties while browsing Redfin. You can even compare the condition of your own house to those of your neighbors!

This tool is available for free on the Chrome store.

What’s next for you?

As the summer winds down, I will begin to shift my focus to 2020. We have big plans to grow our team, revenue, and product. During this time it’s important to remember the basics: Delivering on your promises, remaining flexible, being prompt, and providing the best service possible. This is what keeps customers on board.

Additionally, our product pipeline for 2020 is strong. We have several new products in the works that will provide insights into real estate that were never before possible.

What’s a cause you’re passionate about and why?

I have been volunteering with The Marty Lyons Foundation with my family since before I can remember. The Marty Lyons Foundation fulfills the special wishes of children who have been diagnosed as having a terminal or life-threatening illness by providing and arranging wish requests. The MLF is an outstanding organization to be a part of, and Marty is a great man and a true friend. This dedication to service is an integral part of the culture at Foxy AI, where we continue to volunteer today.

Thanks to Vin for sharing his story. If you’d like to connect, find him on LinkedIn here.

We’re constantly looking for great real estate tech entrepreneurs to feature. If that’s you, please read this post — then drop me a line (drew @ geekestatelabs dot com).

Source: geekestateblog.com

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One creator is sharing what she claims is “the best hack” for home decor.

On Aug. 21, Alyssa Collins (@lyssielooloo), a 27-year-old creator in San Diego, took to TikTok to share a user-friendly method for envisioning what an item looks like in your space before buying it.

“OK, I truly hate to be braggadocious, but I feel like I have the best hack ever for home decor, if you see something online that you really like but you don’t know how it would look in your house,” Collins begins. “It’s called ‘The Power of Copy and Paste.’”

Collins says that when she first shows people how to do it, they “are seriously flabbergasted.” She then demonstrates this “power,” using an iPhone photo she took of her kitchen, after debating for a while whether she should purchase a runner for it.

What’s ‘The Power of Copy and Paste’?

“So I’ve been browsing Facebook Marketplace, and I come across this beauty. And I’m like, ‘Hmm, I have no idea if that would look good with my kitchen colors,” Collins explains, describing a “vintage Turkish runner” she found for $185. “So I just save the photo off of Facebook Marketplace, and then I press and hold on the rug, click copy. And then I bring a photo of my kitchen into the Instagram app, and I press paste.”

As she looks at the finished mock-up, Collins says, “Tell me that doesn’t look realistic. And now I know exactly what the runner would look like in my kitchen.”

Collins then uses the same method to see how a set of lilac curtains from Urban Outfitters would work.

“Copy, paste ’em. I gotta get them. They’re so cute,” she says. “But, yeah, I’ve done this for pretty much every single item in my entire house. And trust me when I say the mockups look very realistic to how they actually look.”

‘Had to watch this twice to really cement how to do it’

Based on Collins’s comment section, many users appear to be impressed with her simple-to-use hack. Other creators with a background in interior design have shared additional tips on how to ensure that the item actually fits correctly in the space.

“Bragadocious is in my vocabulary now,” @chelseymun_ wrote.

“As an interior designer….make sure you scale it correctly!!! Measure twice buy once!” @savscov cautioned.

“Had to watch this twice to really cement how to do it,” @its.indigogo wrote, to which Collins replied, “It starts to become muscle memory after a wee bit.”

In The Know by Yahoo is now available on Apple News — follow us here!

More from In The Know:

This is the exact lip liner Hailey Bieber uses in her ‘strawberry girl’ makeup routine — and it’s only $5

This $10 conditioner is the secret to fast, healthy hair growth: ‘My hair has grown about 3 inches!’

Listen to the latest episode of our pop culture podcast, We Should Talk:

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“If you’re Filipino, you know what’s in my brain right now.”

Asian Americans on TikTok are discussing their experiences as token members of “toxic,” predominantly East Asian friend groups.

One woman was blocked by Vinny Guadagnino of “Jersey Shore” after criticizing his barber.

Ruby Franke, the mom behind the family YouTube channel 8 Passengers, was arrested on Aug. 30 under suspicion of two counts of aggravated child abuse.

Source: intheknow.com

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Buying a home is a big deal, both emotionally and financially. For many people, homeownership is still an essential part of the American dream. And, of course, it’s the biggest investment some will ever make. With the median price of a house hitting $428,700 in mid-2022 (ka-ching), it’s not a purchase to be made lightly.

If you’re buying a home for the first time, you may expect it to be the same as those quick, fun-and-done experiences portrayed on reality TV shows. In truth, however, it’s a process with a steep learning curve and many moving parts, from figuring out your home-shopping budget to satisfying your final mortgage contingencies. There can be minor hiccups as well as major missteps along the way.

That’s where this article comes in. It will educate you about the six most common first-time homebuyer mistakes and help you avoid them, including:

•   Not knowing how much house you can afford

•   Not shopping around for the best mortgage rate

•   Waiving an inspection because you’ve found your dream house.

First-Time Homebuyer Mistakes to Avoid

You’ve new to this homebuying business, so it’s worthwhile to educate yourself a bit about a few of the key moves to make the process go smoothly. Here, we’ll highlight the steps required for first-time homebuyers and help you avoid some common mistakes when buying a house.

1. Not Getting Your Mortgage Paperwork Moving

Before you start browsing online listings or get your heart set on a certain neighborhood, it might be a good idea to contact a lender (or, better yet, lenders) to show sellers that you are loan-worthy. If you don’t get your mortgage pre-qualification or even a pre-approval started, you’re unlikely to impress sellers as a serious bidder worth their consideration. You might just look like a person who enjoys poking around open houses for design ideas.

Nip that in the bud as follows:

•   Pre-qualification: You’ll provide basic information about your debt, income, assets, etc., and they will run a credit check and can give you an idea of how much you can borrow.

•   They will also share information on different types of loans — such as fixed-rate vs. variable-rate and 30-year vs. 15-year term — so you can see what best suits your financial situation and goals.

Remember, though: Mortgage pre-qualification isn’t a commitment for the lender or buyer — it’s just a first step. If you appear to meet a lender’s standards, you could move on to the pre-approval stage.

•   Pre-approval: This involves submitting additional income and asset documentation for a more in-depth review of your finances.

•   Once the lender approves these aspects of your loan application, you’ll receive a conditional commitment for a designated loan amount — called a pre-approval letter — and have a better idea of what your loan terms will be.

•   Mortgage pre-approval can help demonstrate to sellers that you’ve completed the first step in getting a mortgage because your credit, income, and assets have already been reviewed by an underwriter. This can smooth the bidding process and could give you an edge over others in a competitive situation with multiple offers.

2. Not Checking Out First-Time Homebuyer Programs

It’s wise to shop around for a few different mortgage quotes, but it can be a rookie mistake to overlook some great, government-sponsored programs that make homebuying more affordable. These include:

•   insurance (PMI), along with lower closing costs and a low interest rate.

•   FHA Loans : These mortgages are designed for those with low to moderate incomes. They typically offer low down-payment requirements, low interest rates, and the ability to get approval even if you have a fair credit score.

•   USDA Loans : These provide affordable mortgages to those with a lower income who are planning on buying a home in a qualifying rural area.

•   VA Loans : These mortgages help those on active military duty, veterans, and eligible surviving spouses become homeowners. If you can check one of those boxes, you may be eligible for a home loan with no down payment and no private mortgage.

3. Not Being Realistic About What You Can Afford

Once you know more about your mortgage pre-qualification, you can avoid the homebuying mistake of not knowing your home buying budget. The lender you choose will tell you the maximum amount you’re approved to borrow for a home, but you don’t have to use every penny of that money.

It’s important to keep other factors in mind as you determine the top price you’ll pay for your first home. If you don’t have your pricing guardrails in place, you could wind up overbidding and winding up with a too tight budget. Here, some ways set your sights realistically:

•   Ask yourself if your projected mortgage payment will fit comfortably into your monthly budget. You may have to make some tradeoffs — less travel, shopping, or dining out — if your new payment is higher than your current rent or loan payment, which you can figure out with a mortgage calculator.

•   Keep in mind that your mortgage probably isn’t the only new expense you’ll have to cover. If you’re buying a bigger place than your current rental, you will likely pay more for utilities. If the home has a lawn or pool, you might have to maintain them or pay someone else to do it. Or you may have a homeowner association (HOA) fee. Add those costs, gleaned from online sources and/or open houses, to your projected monthly budget (you can make a budget in Excel, use paper and pencil, or work with an app).

•   You’ll also have to account for the cost of homeowner’s insurance and paying your property taxes. You can get some idea of what those costs will be by searching online. There are insurance calculators, and most home listings give you the annual property taxes.

By doing the math, you’ll make sure you are ready to keep up with the monthly flow of expenses without dipping into savings or taking on credit card debt.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

4. Digging Too Deep for a Down Payment

In their eagerness to become homeowners, many first-time buyers make the mistake of going overboard and directing every bit of money they have to the purchase.

If you have to drain your emergency savings to manage the down payment on a home, you might want to dial down the amount or wait and save up a bit more. Consider what could happen if the home needs a costly repair or, worse, if you or someone in your family suddenly has an expensive medical bill. That’s a good example of when to use an emergency fund.

The same thing holds for taking money from your retirement savings. The IRS allows first-time homebuyers (which the IRS defines as not owning a primary residence in the past two years) to withdraw money from an IRA penalty-free . But this is capped at $10,000, and you’ll still pay federal and state income taxes on the money — and lose out on the growth you’d possibly have if you left those funds alone.

If you have a 401(k), you could take a loan against those funds, but again, there are consequences. There may be a provision in your plan that prohibits you from making additional contributions until the loan balance is repaid, so you’ll miss out on any growth, and you may be required to pay back the loan immediately if you quit or lose your job. If that happens, the money you borrowed will become fully taxable and may be subject to a 10% early withdrawal penalty.

There are benefits to putting 20% down on a home: You’ll avoid paying private mortgage insurance (PMI) and your monthly payments will be lower. But 20% isn’t required. For example, the minimum down payment required for a conventional loan is 3%, and for an FHA loan, it’s 3.5%. According to the National Association of Realtors, first-time buyers typically put down 7% of a home’s price in 2021.

With all the other costs you could be looking at as you move into a home — closing costs, utility deposits, moving expenses, decorating, and more — your down payment amount is something to consider if you want to avoid getting in over your head.

5. Passing on a Full Inspection

It may be tempting to waive the home inspection when you’re trying to buy the home of your dreams — especially if you have some stiff competition to be the winning bidder for an in-demand property.

Sorry to say, this is a risky strategy. A home inspection might reveal critical information about the condition of a home and its systems, from electrical problems to hidden mold; from a failing septic system to a leaky roof. What you learn in an inspection could reveal that your dream home is actually a money pit.

What’s more, your inspection report might serve as a useful negotiating tool: You could use it to ask for repairs or to work out a better price from the seller. And if you really aren’t happy with the inspection results, you may be able to use it to cancel the offer to buy.

💡 Recommended: 7 Important Factors That Affect Property Value

6. Letting Your Emotions Get The Better of You

Homebuying can be a roller coaster, so it’s important to prepare yourself psychologically as well as financially. If you’ve ever talked to someone buying a house, you know there are potential pitfalls all through the purchasing process.

You might fall in love with the perfect house and find it’s way over your budget. You might get annoyed with the sellers or their Realtor, especially during the negotiation process. You might disagree with your spouse or a co-buyer about priorities.

All of these scenarios can cause a person to behave emotionally. It might make you want to walk away from a great deal. It might lead you to barrel ahead with a purchase, even when warning lights are flashing.

How to avoid such mistakes when buying a house? By recognizing that this will be a challenging and at times stressful process (especially because you are new to it), you can proceed more calmly. Find tools that help you move ahead with patience and a sense of calm, best as you can. With your eye on the prize — namely, your first home — you’ll get there.

💡 Recommended: 31 Ways to Save for a Home

The Takeaway

Buying a home for the first time is an exciting moment, but one that takes some time and care to make sure you avoid rookie mistakes. You’ll want to do due diligence, not skip steps, or get carried away by emotion.

When you’re ready to line up your financing, the loan terms you get could be nearly as significant as your home’s location in terms of long-term satisfaction.

When shopping for a mortgage, you may want to compare different interest rates, the length of the loan, and other factors that make one lender a better fit than another.

With a SoFi mortgage loan, for example, the pre-qualification process is super simple, and our loans have competitive rates. What’s more, qualifying first-time homebuyers can put down as little as 3%, and work with our Mortgage Loan Officers who can coach you through the required steps.

If you’re thinking about buying a home, see what a SoFi mortgage could do for you.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Source: sofi.com

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Graduating high school and attending college are milestone achievements for students and their families. Getting to this stage requires hard work, financial planning, and communication between parents and their children.

If you’re hoping that your child will go to college after high school, talking about college well before they get to senior year can better prepare them for success.

There is no one-size-fits-all approach to getting ready for college, and the same goes for college conversation starters. Here are some tips and strategies to consider as you prepare to have the college talk with your child.

When is it too Early to Talk about College?

Putting off the college talk is generally a greater concern than starting too early. While kids are young, you can begin planting seeds in everyday conversation about college and careers. Consider taking a gradual approach. This can give your child time and space to come forward with their own thoughts to create a college conversation rather than a college lecture.
💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

When is it too Late to Talk about College?

There isn’t a definitive best time to start talking about college, but waiting too long could put your child at a disadvantage.

Many college admissions offices evaluate every year of high school to calculate a student’s grade point average (GPA) and academic performance. While junior year can be given greater weight, a bad grade in algebra as a freshman doesn’t disappear either. For this reason, the transition from middle school to high school can be an opportune time to begin talking about college.

While the academic side is important to emphasize, an overly direct approach could potentially stifle the college talk. Starting early can help you build a better foundation to discuss the more difficult and stressful parts of preparing for college.

Do Your Own Homework on the College Process

As a parent or guardian, doing some initial research can inform you on the nuts and bolts of the college process and show your child that you are supportive of their education. It’s no surprise that college is expensive, but there are options to make college more affordable.

First off, you may want to gauge how much financial aid your family could qualify for with the government’s Federal Student Aid Estimator . This tool provides a free estimate of federal aid eligibility, including work-study, grants, and federal student loans.

There has been a growing call for waiving standardized tests for college admission, but most schools still require SAT or ACT scores for admission. Not every family is in the position to pay for tutors and prep classes, but it is worth noting that students can take these tests multiple times to improve their scores.

Through a process called “superscoring,” some colleges accept a student’s best section-level scores for math and evidence-based reading, even if they are from different test dates.

Some other useful tidbits to be aware of as you start the college conversation include:

•  College application fees: The cost varies by institution. The average application fee runs around $45, though some schools charge as much as $100 to apply. However, applicants could qualify for a waiver if they meet certain criteria for financial need.
•  In-state vs. out-of-state tuition cost: Each state has its own public university system that is partially funded by taxpayer money. Therefore, the base tuition cost for in-state residents is less than out-of-state students, though this does not account for potential scholarships and financial aid. Students attending out-of-state public universities typically pay more for tuition than in-state residents, though the cost may still be less than attending a private college.
•  Local scholarship opportunities: Community organizations, nonprofits, and businesses may offer scholarships specifically to graduates of your child’s high school or within your community. Criteria varies, but common elements might include academic merit, leadership, and financial need.

Now let’s move on to some helpful college conversation starters.

We are here to help
you pay for school

Asking About Their Goals, Dreams, and Worries

Adolescence is a journey in self-discovery, but also insecurity and social pressure. In addition to your child’s future aspirations, acknowledge that they may have doubts and worries about attending college or moving away from home. Simply listening and showing your support is a good start to moving forward with the college talk.

On a lighter note, your child doesn’t need to have it all figured out by the time they decide to enroll in college. Some students do not declare a major until a few semesters into college. This means they can take a variety of classes before making a final decision for their degree.

Still, there are hundreds of college majors to consider, and not all colleges have the same offerings, so narrowing it down a little beforehand can help your child find a college that fits their needs and graduate on time.

Attending a local college with friends may be really important to your child, or they may be dead set on a specialized subject only offered at a handful of colleges. Either way, there is still plenty to discuss for their future plans.

Recommended: College vs University: What’s the Difference?

Attending College and Career Events Together

Many high schools host career and college fairs throughout the academic year. Often, these events are marketed towards juniors and seniors who are approaching application deadlines and graduation. If your student is a freshman or sophomore in high school, these fairs can provide a convenient opportunity to start browsing their options without the pressure of applying yet.

Having the confidence to speak with college admissions recruiters at these events is not only great practice, but can gain application fee waivers and insight into scholarships and other opportunities.

Similarly, colleges organize open house events and tours for prospective students and their families throughout the year. Starting with an unofficial tour of a nearby college campus can be a low-stakes introduction.

Incorporating college visits and tours into a family vacation is another way to test the waters of living and studying away from home.

Recommended: College Planning Guide for Parents of High School Students

Sharing Your Own Experiences

Sharing personal experiences from college can be a natural way to broach the subject, as well as connect with your child on a more peer-to-peer level.

Your child may be surprised to learn which friends you made in college that they’ve known since birth. There are a lot of practical and logistical topics to cover during the college conversation, so this is a chance to bond over more personal stories.

If you didn’t have the opportunity to attend college, that’s okay too. Letting your child know that college is a possibility for them is what matters.

Asking friends who attended college or whose children are in college for advice could offer some insight.

Also, inviting a trusted family member or friend to join the college talk with you and your child is another way to continue the conversation in a caring environment. If your child will be a first-generation college student, keep in mind that they may be eligible for specific types of programs and scholarships.

Letting Them Know Your Financial Plan

Your child may be more intuitive than you think. If you haven’t brought up the matter of paying for college yet, they may assume their education options are more limited than the reality.

Talking about money with your children may feel awkward, but college isn’t cheap, and paying for it is a critical piece of the equation for selecting a school that is right for them.

You don’t have to get too deep in the weeds, but discussing payment options can help put your child at ease. Fortunately, there are several ways to pay for college, such as scholarships, grants, and student loans.

Grants and scholarships generally do not require repayment and are used for education and associated expenses. Both can be awarded through financial aid packages or nonprofit and community organizations.

Additionally, scholarships can be awarded by colleges directly or through a competitive application process. Learning about these opportunities early on could better prepare your child for receiving scholarships and grants.

When approaching student loans, an important piece to convey to your child is the impact of interest. With an unsubsidized federal student loan, interest starts to accrue when the loan is disbursed, and continues accruing until the loan is paid back.

With subsidized federal student loans, the interest is covered by the government while the student is in school at least half time and through a six-month grace period after the student leaves school. With either type of federal loan, you don’t need to begin repayment until six months after graduation.

Generally, interest will also start accruing immediately with private student loans. However, the terms on private student loans vary by lender, so confirm with the loan servicer to be sure. Some private lenders also allow students to defer making any payments until six months after graduation.

Paying off loans ahead of schedule could result in a lower total repayment amount, but consult with your loan provider to be sure. For more information, take a look at this primer on student loans.

This can also be the time to have a candid conversation about getting a summer job and pitching in to save for college.
💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsididized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

Paying for College

Federal student loans, scholarships, grants, and work-study programs may be sufficient to fund all or at least a portion of your child’s education.

However, some students take out private student loans to pay for their education and associated living expenses, when federal aid and savings aren’t enough to cover the costs.

Alternatively, college parents can borrow loans to support their child’s education expenses. The federal government’s PLUS loans program for parents is one option to consider. Private lenders also offer parent student loans with potentially lower interest rates.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Source: sofi.com

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Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.


Why You Can Trust GoodFinancialCents®

GoodFinancialCents® partners with outside experts to ensure we are providing accurate financial content.

These reviewers are industry leaders and professional writers who regularly contribute to reputable publications such as the Wall Street Journal and The New York Times.

Our expert reviewers review our articles and recommend changes to ensure we are upholding our high standards for accuracy and professionalism.

Our expert reviewers hold advanced degrees and certifications and have years of experience with personal finances, retirement planning and investments.

When I became an accredited investor, I found myself among an elite group with the financial means and regulatory clearance to access investments that many couldn’t. This opened doors to exclusive realms like hedge funds, venture capital firms, specific investment funds, private equity funds, and more.

Even though I had this “exclusive access” it took me awhile to start investing in alternative asset classes.

The Securities and Exchange Commission states that as an accredited investor, I possess a level of sophistication that equips me to craft a riskier investment portfolio than a non-accredited investor. While this might not be universally true for everyone, in my case, I had demonstrated the financial resilience to bear more risk (see barbell investing), especially if my investments took an unforeseen downturn.

One of the intriguing aspects I discovered was that investment opportunities for accredited investors aren’t mandated to register with financial authorities. This means they often come with fewer disclosures and might not be as transparent as the registered securities available to the general public.

The underlying belief is that my status as a sophisticated investor implies a deeper understanding of financial risks, a need for less disclosure on unregistered securities, and a conviction that these exclusive investment opportunities are apt for my funds.

On a personal note, as a practicing CFP®, I hadn’t always worked with accredited investors. Early in my career, I didn’t quite grasp the allure. But as time went on, I began to see the broader spectrum of investment options available to accredited investors.

As I learned more the clearer it became why this realm was so sought after. The variety and potential of these exclusive opportunities were truly eye-opening, reshaping my perspective on the world of investing.

Introduction to Accredited Investors

An accredited investor is an individual or a business entity that is allowed to trade securities that may not be registered with financial authorities. They are entitled to this privileged access because they satisfy one or more requirements regarding income, net worth, asset size, governance status, or professional experience.

The concept of an accredited investor originated from the idea that individuals or entities with a higher financial acumen or more resources are better equipped to understand and bear the risks of certain investment opportunities.

Historically, the distinction between accredited and non-accredited investors was established to protect less experienced investors from potentially risky or less transparent investment opportunities.

Regulatory bodies, such as the U.S. Securities and Exchange Commission (SEC), have set criteria to determine who qualifies as an accredited investor, ensuring that they have the financial stability and sophistication to engage in more complex investment ventures.

Criteria for Becoming an Accredited Investor

To be classified as an accredited investor, one must meet specific criteria set by regulatory bodies:

Criteria Description
Income Requirements An individual must have had an annual income exceeding $200,000 (or $300,000 for joint income with a spouse) for the last two years, with the expectation of earning the same or a higher income in the current year.
Net Worth Requirements An individual or a couple’s combined net worth must exceed $1 million, excluding the value of their primary residence.
Professional Credentials Recent updates have expanded the definition to include individuals with certain professional certifications, designations, or other credentials recognized by the SEC. Examples include Series 7, Series 65, and Series 82 licenses.
Business Entities Entities, such as trusts or organizations, with assets exceeding $5 million can qualify. Additionally, entities in which all equity owners are accredited investors may also be considered accredited.

Best Investment Opportunities for Accredited Investors

Here’s a rundown of some of the top investment for accredited investors…

1. Fundrise

  • Minimum Investment: $500
  • Best for: Newbie Investors

Fundrise has revolutionized the real estate investment landscape. By democratizing access to real estate portfolios, it allows individuals to invest without the complexities of property management or the need for vast capital. The platform’s innovative approach provides exposure to a traditionally lucrative, yet often inaccessible, sector of the market

Through Fundrise, investors can access a diversified range of properties, from commercial ventures to residential units. The platform’s expert team curates these portfolios, ensuring a balance of risk and reward. With its user-friendly interface and transparent reporting, Fundrise has become a top choice for many venturing into real estate investments.

How it Works:
Investors start by choosing a suitable investment plan on Fundrise. Once invested, the platform pools the funds with other investors and allocates them across various real estate projects. As these properties generate rental income or appreciate in value, investors receive returns in the form of dividends or appreciation.

Pros:

  • Diversified real estate portfolios.
  • User-friendly platform with transparent reporting.

Cons:

  • Limited liquidity compared to public markets.
  • Returns are dependent on real estate market performance.

2. Equitybee

  • Minimum Investment: $10,000
  • Best for: Experienced Investors

Equitybee offers a unique platform that bridges the gap between private companies on the cusp of going public and potential investors. This innovative approach provides a golden opportunity for investors to tap into the potential of startups and other private firms before they make their public debut.

The platform’s primary focus is on employee stock options. By allowing investors to invest in these options, they can potentially benefit from their appreciation as the company grows. With a vast array of companies, from emerging startups to established giants, Equitybee presents a diverse range of investment opportunities.

How it Works:
Investors browse available stock options from various companies on Equitybee. Once they choose an option, they invest their funds, which are then used to purchase the stock options from the employees. If the company goes public or gets acquired, the investor stands to gain from the increased value of these stocks.

Pros:

  • Access to pre-IPO companies.
  • Diverse range of startups and established firms.

Cons:

  • Platform fee of 5%.
  • Potential risks associated with private market investments.

3. Percent

  • Minimum Investment: $500
  • Best for: Novice Investors

Percent stands as a beacon in the vast sea of the private credit market, illuminating a sector often overshadowed by traditional investments. This burgeoning market, valued at over $7 trillion, consists of companies borrowing from non-bank lenders. Percent offers a unique vantage point into this market, allowing investors to diversify their portfolios beyond typical stocks and bonds.

The allure of Percent lies in its ability to offer shorter terms and higher yields, combined with investments that are largely uncorrelated with public markets. This makes it an attractive proposition for those looking to step away from the volatility of traditional markets.

How it Works:
Upon joining Percent, investors are presented with a plethora of private credit opportunities. After selecting an investment, funds are pooled with other investors and lent out to companies seeking credit. As these companies repay their loans, investors earn interest, providing a steady income stream.

Pros:

  • Access to the burgeoning private credit market.
  • Potential for higher yields.

Cons:

  • Requires understanding of private credit dynamics.
  • Less liquidity compared to public markets.

4. Masterworks

  • Minimum Investment: $10,000
  • Best for: Novice Investors

Masterworks paints a vivid picture of art investment, blending the worlds of finance and fine art. Traditionally, investing in art was a luxury reserved for the elite. However, Masterworks has democratized this, allowing individuals to buy shares in artworks from world-renowned artists.

The platform’s strength lies in its expertise. From authentication to storage, every facet of art investment is handled meticulously. This ensures that investors can appreciate both the beauty of their investments and the potential financial returns.

How it Works:
After registering on Masterworks, investors can browse a curated selection of artworks. They can then purchase shares, representing a fraction of the artwork’s value. Masterworks takes care of storage, insurance, and eventual sale. When the artwork is sold, investors share the profits based on their ownership.

Pros:

  • Opportunity to diversify with fine art.
  • Managed by art experts.

Cons:

  • Art market can be unpredictable.
  • Long-term investment horizon.

5. Yieldstreet

  • Minimum Investment: $15,000
  • Best for: Advanced Investors

Yieldstreet stands at the intersection of innovation and alternative investments. It offers a smorgasbord of unique investment opportunities, ranging from art to marine finance. For those looking to venture beyond the beaten path of traditional stocks and bonds, Yieldstreet presents a tantalizing array of options.

The platform’s allure lies in its curated selection of alternative investments, each vetted by experts. This ensures that while investors are treading unconventional grounds, they’re not stepping into the unknown blindly.

How it Works:
Investors begin by browsing through the diverse investment opportunities on Yieldstreet. After selecting their preferred asset class, their funds are pooled with other investors and allocated to the chosen venture. Returns are generated based on the performance of these assets, be it through interest, dividends, or asset appreciation.

Pros:

  • Wide range of alternative investments.
  • Potential for high returns.

Cons:

  • Some niches may be too specialized.
  • Requires a deep understanding of chosen investments.

6. AcreTrader

  • Minimum Investment: $10,000
  • Best for: Newbie Investors

AcreTrader, as its name suggests, brings the vast expanses of farmland to the investment table. It offers a unique opportunity to invest in agricultural land, combining the stability of real estate with the evergreen nature of agriculture. With the global population on the rise, the value of fertile land is only set to increase.

The platform meticulously vets each piece of land, ensuring only the most promising plots are available for investment. This rigorous process ensures that investors are planting their funds in fertile ground, poised for growth.

How it Works:
Investors peruse available farmland listings on AcreTrader. After selecting a plot, they can invest, effectively owning a portion of that land. AcreTrader manages all aspects, from liaising with farmers to ensuring optimal land use. Investors earn from the appreciation of land value and potential rental income.

Pros:

  • Stable, tangible asset.
  • Potential for steady returns.

Cons:

  • Returns may be slower compared to other platforms.
  • Limited to U.S. farmland.

7. EquityMultiple

  • Minimum Investment: $5,000
  • Best for: Experienced Investors

Summary:
EquityMultiple is a testament to the power of collective investment in the real estate sector. By leveraging the principles of crowdfunding, it offers a platform where multiple investors can pool their resources to finance high-quality real estate projects. This collaborative approach allows for diversification and access to projects that might be out of reach for individual investors.

The platform’s strength lies in its curated selection of real estate opportunities, ranging from commercial spaces to residential properties. With a team of seasoned real estate professionals at the helm, EquityMultiple ensures that each project is vetted for maximum potential and minimal risk.

How it Works:
Upon joining, investors can explore a variety of real estate projects. After committing to a project, their funds are pooled with other investors to finance the venture. Returns are generated through rental incomes, property appreciation, or the successful completion of development projects.

Pros:

  • Diverse real estate opportunities.
  • Managed by real estate professionals.

Cons:

  • Market risks associated with real estate.
  • Longer investment horizons.

8. CrowdStreet

  • Minimum Investment: $25,000
  • Best for: Advanced Investors

CrowdStreet stands as a pillar in the commercial real estate investment domain. With its vast experience and industry connections, it offers a platform where investors can tap into prime real estate projects across the nation. From bustling urban centers to tranquil suburban locales, CrowdStreet provides a diverse range of investment opportunities.

The platform’s expertise ensures that each project is meticulously vetted, offering a blend of potential returns and stability. For investors looking to delve into commercial real estate without the hassles of property management, CrowdStreet is an ideal choice.

How it Works:
After registration, investors can browse a myriad of commercial real estate offerings. Upon investing in a project, CrowdStreet manages the investment, providing regular updates and ensuring optimal project execution. Investors earn returns based on the project’s performance, be it through rentals, sales, or project completions.

Pros:

  • Access to prime commercial properties.
  • Established platform with a proven track record.

Cons:

  • High minimum investment.
  • Market dependency for returns.

9. Mainvest

  • Minimum Investment: $100
  • Best for: Newbie Investors

Mainvest offers a refreshing twist in the investment landscape, focusing on the heart and soul of the American economy: local businesses. From quaint cafes to innovative startups, Mainvest provides a platform where investors can support and benefit from the growth of small businesses in their communities.

The platform’s community-centric approach ensures that investments are not just about returns but also about fostering local economies. For those looking to make a difference while earning, Mainvest presents a unique opportunity.

How it Works:
Investors can explore various local businesses seeking capital on Mainvest. By investing, they essentially buy a revenue-sharing note, earning a percentage of the business’s gross revenue until a predetermined return is achieved.

Pros:

  • Support and invest in local businesses.
  • Low minimum investment.

Cons:

  • Risks associated with small business investments.
  • Returns might be slower compared to other platforms.

10. Vinovest

  • Minimum Investment: $1,000
  • Best for: Novice Investors

Vinovest uncorks the world of wine investment, offering a blend of luxury, history, and financial growth. Fine wines have been a symbol of opulence for centuries, and Vinovest provides a platform where this luxury becomes an accessible investment.

With a team of wine experts guiding the way, the platform ensures that each wine is not just a drink but an investment poised for appreciation. From sourcing to storage, Vinovest handles every facet, ensuring the wine’s value grows over time.

How it Works:
After signing up, investors set their preferences and investment amount. Vinovest then curates a wine portfolio based on these preferences, handling sourcing, authentication, and storage. As the wine appreciates, so does the investor’s portfolio.

Pros:

  • Unique investment opportunity in fine wines.
  • Managed by wine connoisseurs.

Cons:

  • Long-term holding for optimal returns.
  • Market influenced by external factors like climate.

11. Arrived Homes

  • Minimum Investment: $100
  • Best for: Novice Investors

Arrived Homes offers a fresh perspective on real estate investment, focusing on the charm of single-family homes. While skyscrapers and commercial complexes often dominate real estate discussions, single-family homes offer stability, consistent returns, and a touch of nostalgia.

The platform’s strength lies in its focus. By concentrating on single-family homes, it offers investors a chance to tap into a stable real estate segment, benefiting from both rental income and property appreciation.

How it Works:
Investors browse available properties on Arrived Homes. After selecting a property, they can invest in shares, representing a portion of the home’s value. As the property is rented out, investors earn a share of the rental income. Additionally, any appreciation in property value benefits the investors.

Pros:

  • Low minimum investment.
  • Quarterly dividends.

Cons:

  • New platform with a shorter track record.
  • Limited to single-family homes.

12. RealtyMogul

  • Minimum Investment: $5,000
  • Best for: Novice to Experienced Investors

RealtyMogul stands tall in the commercial real estate investment landscape. It offers a platform where diversification meets opportunity, presenting a range of commercial properties for investment. From bustling office spaces to serene residential complexes, RealtyMogul provides a plethora of options for investors to expand their portfolios.

The platform’s prowess lies in its dual approach. Investors can either dive into non-traded REITs or make direct investments in specific properties. This flexibility ensures that both novice and experienced investors find opportunities that align with their investment goals.

How it Works:
Upon joining RealtyMogul, investors can choose between REITs or direct property investments. Their funds are then channeled into these real estate ventures. Returns are generated through rental incomes, property sales, or successful project completions.

Pros:

  • Wide range of commercial properties.
  • Both REITs and direct investments available.

Cons:

  • Market risks inherent to real estate.
  • Higher minimums for direct investments.

The Future of Accredited Investing

The world of accredited investing is dynamic and ever-evolving. Emerging trends suggest a shift towards democratizing investment opportunities, with regulatory bodies considering more inclusive criteria for accredited investor status. This shift aims to balance the need for investor protection with the recognition that financial acumen can come from experience and education, not just wealth.

Furthermore, technological advancements are playing a pivotal role. The rise of blockchain and tokenized assets, for instance, is creating new avenues for investment and might reshape the landscape of opportunities available to accredited investors.

xAs the line between traditional and alternative investments blurs, the future promises a more integrated, inclusive, and innovative environment for accredited investors.

The Bottom Line – Top Investments for Accredited Investors

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Understanding the role and opportunities of accredited investors is crucial in the modern financial landscape. While the distinction offers privileged access to unique investment opportunities, it also comes with increased risks and responsibilities.

As the world of investing continues to evolve, potential accredited investors are encouraged to stay informed, conduct thorough research, and seek professional advice. The realm of accredited investing, with its blend of challenges and opportunities, promises exciting prospects for those ready to navigate its complexities.

FAQs – Investment Options for Accredited Investors

Why is there a distinction between accredited and non-accredited investors?

The distinction is primarily for investor protection. Accredited investors are deemed financially savvy or stable enough to handle the risks associated with unregistered securities, which might be riskier and less transparent.

What investment opportunities open up for accredited investors?

Accredited investors gain access to a broader range of investment opportunities, including hedge funds, private equity, venture capital, certain private placements, and more.

Are investments for accredited investors riskier?

While not inherently riskier, these investments often come with less regulatory oversight and transparency, which can increase potential risks. It’s essential to conduct thorough due diligence before investing.

Do accredited investors have any advantages in the public stock market?

While the primary benefits of being an accredited investor pertain to private investment opportunities, the financial acumen and resources associated with accredited investors can also be advantageous in public markets, especially when considering more complex investment strategies.

About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.

Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

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