Investing in Real Estate as a Non-Accredited Investor: REITs, Direct Investing, and Crowdfunding

Post by 

In 2020, only 10.6% of American households were accredited (keep in mind the definition of “accredited investor” hasn’t changed since 1983 and is not adjusted for inflation) .

And, it’s probably no secret that we at Birgo Capital think more than 10.6% of American households should invest in real estate as a way to stabilize and diversify their investment portfolio.

Young professionals in their 20s or those just beginning to create an investment portfolio are likely unaccredited investors. This means that the SEC has certain regulations in place regarding access to financial products and securities.

However, real estate investment options still exist for unaccredited investors. 

Let’s explore those options.

Why should I add real estate to my investment portfolio?

Let’s set aside the assumption that real estate investment is for the wealthy. Let’s assume real estate investment strategies are equally available to everyone. Within recent years, more and more affordable real estate investing financial products have been launched, specifically under the Reg A SEC regulation.

“What are the benefits of real estate investing if you don’t have a large portfolio?”

Passive income

Besides complex, illiquid investment strategies like venture capital and hedge funds, or new and exciting, but risky investments like cryptocurrency, real estate is the best investment for generating passive income

Lower-risk options like dividend stocks may be better options for some investors. For others, the ability to create passive income is the determining factor to start investing in real estate.


Real estate investment benefits from the tangibility of the asset: land.

Some emerging investment strategies are susceptible to a celebrity tweeting away your hard-won returns. They probably can’t tweet away the value of an apartment building or plot of land. 

As the 2021 red-hot single-family market has demonstrated, housing demand doesn’t magically disappear when an economic crisis strikes.


For most investors who aren’t sitting on the boards of corporations, or throwing around multi-million-dollar brokerage accounts, uncontrollable factors impact equities markets. Pick a stock, hold the stock, and hope the company performs well. Investors can’t do anything to make it perform well. 

Real estate investors don’t need to be incredibly involved, but they certainly can be if they want more control. If an owner-operator landlord thinks they could increase rent with nicer fixtures or new finishes,  they can run to the Home Depot, buy the parts, and install them by hand.

How can I  invest in real estate?

Non-accredited investors have a few options. All of them can produce strong returns, but they do involve some trade-offs. Let’s break down the pros and cons of a few popular real estate investing options.


Real estate investment trusts (REITs) are companies that own or finance real estate assets, and allow investors to purchase ownership shares. Investing with a publicly-traded REIT is as simple as purchasing stock, because that’s how it works: buy shares of the REIT, hold onto them, and collect payouts.

FYI: REITs are required by U.S. law to distribute at least 90% of their taxable income as shareholder dividends.

Advantages of REITs


Investing in a REIT unlocks opportunities without requiring investors to take on landlord duties or understand sophisticated financial products and strategies. REITs involve a few unique considerations, but investors already acclimated to the stock market should be well-prepared to invest with a REIT. 

REIT investments are easy to liquidate. When it’s time to close your position, you don’t have to sell a building — you just have to sell stock.


REITs can be massive. The largest REITs own tens of thousands of properties and command market caps close to $100 billion. 

Owning a wide array of properties, sometimes in an array of categories and classes, helps insulate large REITs from risks and threats, and operating at a large volume enables cost-saving economies of scale that improve investor returns.

Disadvantages of REITs

Publicly traded

The REITs accessible to non-accredited investors are often publicly-traded on a stock exchange.

This is valuable in the sense that it makes REITs more accessible. However, it can subvert real estate’s historically stable performance by subjecting it to market forces like run-ups and market crashes.


REITs are easy to invest in, because they do all the work for you. But, the trade-off is that you don’t have personal control over how your investment performs. 

Direct investing and owner-operating might be a better option for Investors who want to personally direct their projects.

Direct Investment

Instead of buying shares in a professional organization that owns and operates property on investors’ behalf, investors that directly invest in real estate personally purchase and operate property.

Advantages of direct investment

Ultimate autonomy

With direct real estate investing, an investor has authority over every aspect of the process and customize it to suit financial goals. 

You want to invest in single-family fixer-uppers and add value with handcrafted crown moldings? Go for it. 

Prefer multifamily property and you know the perfect apartment building in your neighborhood? That’s a real possibility. 

Every acquisition, management, and liquidation is 100% under your control as a direct investor. For savvy investors who know their market well, that independence can yield strong returns.

No fees

Private equity firms often charge expensive fees. REITs must only distribute 90% of taxable income to shareholders. Direct investors, on the other hand, can choose to keep all their profits — no asset management fees, complex disbursement schedules, or waterfalls.


Especially at a small scale, direct investors with a talent for acquisitions may find they can access deep value-creation opportunities that larger ventures overlook. At a small scale, those skills can translate to significantly better returns.

Disadvantages of direct investment

It’s hard

Real estate is a complex field, and while a novice’s investments can perform well with sufficient research and hard work, getting started can be time-consuming. Non-accredited investors risk potentially losing a significant amount of money.

If you are  unaccredited, you’re probably not accessing economies of scale

While some direct investors start their real estate journey with significant funding, unaccredited  investors, by definition, have less cash to start out. While some investors will eventually earn returns that place them in the accredited category, those just starting out may find their margins tighter than larger real estate investors who can consolidate expenses for several properties.

It can be expensive

Depending on the project, initial capital outlays can be formidable. While leverage can help kick-start a direct investment real estate strategy, navigating debt can be risky for beginner investors. 

Some projects will only be realistic for those with the kind of income or net worth that would qualify them as accredited investors.


Real estate crowdfunding is a newer option for non-accredited investors. Crowdfunding strategies allow everyday investors who don’t have the cash to single-handedly execute real estate deals to combine their money.

Usually, investors in a crowdfunding campaign collaborate to purchase a single, high-value commercial asset, such as an office or apartment building.

Crowdfunding is generally made possible by updated SEC regulations that allow non-accredited investors to purchase certain kinds of unregistered securities via Reg CF (a.k.a. Title III of the JOBS Act).

The advantages of crowdfunding

Specific high-quality assets

Crowdfunding allows retail investors to access assets that would otherwise be financially unrealistic.

High returns

In most crowdfunding fund structures, investors receive proportional shares of the profit generated by the asset. In some cases, these returns can rival the returns generated by private equity funds that are out of reach for most non-accredited investors.

REIT-like simplicity

Crowdfunding is far less work than direct investment. Send a check to the deal sponsor, and they’ll take care of the details of acquisition and management. However, prospective crowdfunding investors still need to do more research than REIT investors: not all crowdfunding deals are good investments, and due diligence is an indispensable part of the process.

The disadvantages of crowdfunding


For non-accredited investors, a crowdfunding deal’s minimum contribution may equal the total amount of capital they’re willing to allocate to real estate. For the same monetary contribution, crowdfunding investors are much less diversified than most REIT investors. If the deal performs poorly, investors could stand to lose a significant amount of money.


Crowdfunding, like private equity, usually requires that investors commit their funds for a particular amount of time. Early withdrawal is possible with penalties. 

Investors who anticipate that they may need access to their cash earlier than the exit date may prefer the liquidity of REITs.

Concluding thoughts

Of course, there are more ways for non-accredited investors to stabilize and diversify their investment portfolio with real estate. For many non-accredited investors, some combination of REIT investing, direct investing, and crowdfunding can unlock the benefits of the greatest asset class in the world (okay, we might be a little biased).

As regulations evolve and more innovative alternatives like crowdfunding gain popularity, it’s likely that everyday investors will continue to gain access to real estate investments. That makes us excited.

Keep Up With Birgo

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
THere's More

Posts You Might Also Like

Birgo Capital

2023 THRIVE Report

Birgo's annual impact report for 2023 contains the metrics that we track to seek to fulfill our mission of "improving lives through real estate."
Birgo Capital

Investing in Real Estate Through An SDIRA

TLDR: Investing in real estate through an SDIRA is highly beneficial for accredited investors.
Birgo Capital

ESG Real Estate Investing: How to Make an Impact With Your Investment

How can I invest in the environment’s future? Is my portfolio enabling companies that care about human rights? Are the companies I support operating ethically and do they advocate for things I care about? All this and more in our recent blog article.
Birgo Capital

Read THIS to Get Rich Quick!

Read THIS blog to get rich quick! No gimmicks here!
Birgo Capital

What You Need to Know about Real Estate Syndications

Curious about real estate syndication? Here's what you need to know.