506b offering vs 506c offering
SEC Rule 506c and Rule 506b are rules within Regulation D that specify requirements and limitations for real estate syndication. Rule 506b restricts the general solicitation of offerings and limits the investor pool to a maximum of 35 non-accredited investors in the syndication deal. Regulation D rule 506c allows the real estate syndicator to engage in general solicitation of an offering, and they can raise unlimited capital. Each investor in a Rule 506c offering must be accredited, and the syndicator must take reasonable steps to verify the investor’s accreditation.
We have outlined the steps to complete ahead of time in preparation to invest in our Rule 506c accredited-only deals:
Decide How You Will Take Title (Legal Name in Investment)
Will you be investing with your IRA, 401k, LLC, or individual or joint registration? It’s important to decide your title early so you can consult with your CPA, attorney, and/or financial advisor to ensure you understand the specific tax and estate planning for the title you choose.
Prepare Your ACH Instructions for Distributions
It’s important to update your ACH instructions to make the distribution process go smoothly. Sending distribution checks is not recommended as they can get lost and are difficult to track.
Get Funding In-Place
Our deals are first-come-first-served, so as soon as the funding window opens, we encourage investors to sign the docs and fund as soon as possible to secure their place in the deal.
Obtain Accreditation Document(s)
For a 506c syndication offering, all investors must be accredited. You can work in advance to obtain a Third-Party verification letter (see template below) from qualified issuers as defined in the template.
Accreditation Requirements
- Have an earned income of at least $200,000 (or $300,000 joint income with a spouse) in the previous two years and reasonably expect to continue to maintain that income
- Have a net worth of at least $1 million alone or jointly with a spouse
What are the other ways to verify accredited status?
Aside from getting a letter from your CPA/lawyer using the templates provided, the other two options are:
- Take a Series 7, 65, or 82 test and maintain good standing (will satisfy you to invest being a non-accredited investor or sophisticated investor)
- Difficult method – A website like VerifyInvestor.com will be able to third-party certify you. However, they only last for less than a year, and they will ask for a lot of documentation (i.e., tax returns, W-2 forms, bank/brokerage statements, credit report, etc.)
If you are having any difficulties, or are on the line and feeling blue, and you don’t quite qualify, please reach out to:
And we can provide additional guidance.
Accreditation Template
We have provided a few templates you could download/edit to send to your third-party verifier, as this is the most efficient way of proving your accredited status – remember the last thing your professional wants to do is spend time on this, so make it an “easy-yes” for them.
NOTE: These are just templates. If your CPA/lawyer would like to add additional information to your letter, that’s fine!
Additional FAQ
How do Investment Portals Work?
- Signed PPMs and subscription docs
- Downloadable K-1 tax forms
- Your total investment history
Note: The signing portal is different from your Wealth Elevator portal, which is meant to house e-courses and educational content
What is the Safest Method to Send Funds?
- Avoid sending wires to instructions received via email. Hackers can intercept and swap wire details.
- This is why we use our secure signing portals that generate wiring instructions directly from your investor dashboard—this adds a layer of security.
- Wires can cost $20–$45, depending on your bank. Many investors say they usually have a few free wires per month, depending on their status with their bank. Credit unions often have lower fees.
- Never send a paper check—it’s slower and less secure, and due to those reasons, we do not accept them. As a side note, wires are standard. It’s one of those things you just can’t cheap out on. Very similar to if you’re using TurboTax, let us know if you need a referral to a
CPA, Lawyer, or another vendor here.
What Happens Once I’ve Wired My Funds?
About the author
Lane Kawaoka, PE, is the founder of The Wealth Elevator and the author of two Amazon bestselling books, The Wealth Elevator and Simple Passive Cashflow. He spent 12 years as an engineer, bought his first rental in 2009, and left his job in 2019. He built his base in real estate and today is a general partner, operator and fund manager working with a community of accredited investors across real estate, oil and gas, and private companies. His track record: $2.1B of past real estate acquisitions, 10,000+ units acquired, 65+ projects, and $230M+ raised.
This site is free education for accredited investors and high-income professionals whose net worth sits mostly in stocks, a 401(k) and a salary. Start with the guides, the podcast or an event.
This is educational content, not tax, legal, or investment advice. We are not attorneys, CPAs, or financial planners. Please let us know if you need a referral to a CPA, lawyer, or other vendor here.
