For accredited investors, real estate is one of the most effective ways to build passive income. The SEC defines an accredited investor as someone with $1 million or more in net worth excluding their primary residence, or $200,000 or more in annual income ($300,000 with a spouse) over the past two years with the expectation of the same this year. Accreditation unlocks access to private offerings — real estate syndications, private funds, Delaware Statutory Trusts (DSTs), and REITs — that are not available to the general public. These vehicles pay cash distributions while passing through powerful tax advantages: straight-line depreciation, accelerated depreciation via cost segregation, and bonus depreciation can shelter much of the distribution income on the annual K-1, and gains can later be deferred through a 1031 exchange or Opportunity Zone investment. Most syndications pay a preferred return before any profit split and target a five-to-seven-year hold. LV5 Capital works exclusively with accredited investors, invests its own capital in every deal, and provides transparent reporting. This guide compares the vehicles, explains the tax mechanics, and outlines how to vet a sponsor. Always consult a qualified CPA.
The SEC defines an accredited investor as someone with $1 million or more in net worth excluding their primary residence, or $200,000 or more in annual income ($300,000 with a spouse) over the past two years with the expectation of the same this year. Certain professional certifications also qualify.
Accredited investors typically invest as Limited Partners in real estate syndications or funds. They contribute capital, then receive monthly or quarterly cash distributions, an annual K-1, and a share of the proceeds when the property is refinanced or sold — all without managing tenants, repairs, or operations.
The main vehicles are real estate syndications, private real estate funds, Delaware Statutory Trusts (DSTs), and REITs. Syndications and funds are private and illiquid but offer strong tax benefits and cash flow; REITs are liquid but typically pay ordinary-income distributions. DSTs are passive and qualify as 1031 replacement property.
Most syndications and funds are taxed as partnerships, so you receive a K-1 reflecting your share of income, expenses, and depreciation. Straight-line depreciation, cost segregation, and bonus depreciation often shelter much of the cash distribution from current tax. Gains can later be deferred via 1031 exchange or Opportunity Zone investment. Always consult a CPA.
Most multifamily syndications have a $50,000-$100,000 minimum investment. Private funds may range from $25,000 to $250,000, and DSTs commonly start at $25,000-$100,000. Public REITs can be bought for the price of a single share. The minimum depends on the sponsor, structure, and SEC exemption.
Yes — once you invest as a Limited Partner, the sponsor handles acquisition, financing, property management, and reporting. Your only ongoing involvement is reviewing investor updates and tax documents. The trade-off is illiquidity: capital is typically locked up for the 5-7 year hold with no early redemption right.
Read more in our learn library: Real estate syndication · Passive vs active investing · Cost segregation · 1031 exchange alternatives · Multifamily investing 101. Or view our portfolio and schedule a consultation.