What is Regulation A?
Buying and investing in real estate can be exciting and lucrative. Because it’s been largely open to high worth individuals, it’s a fairly new idea for the average worker to invest in it as the incredible source of income generation and tax benefit offering that it is.
“True real estate investing is understanding the value of a property based on how much money that property can make, not how much money the next person will buy it for. We’re inviting people to participate in a real estate business that is structured in a way that it can increase the value of properties, not based on hopes and speculation, but based on methodical processes to increase income, to increase value. This is how real estate businesses have operated for decades.”
-Husein I. Sonara, FundRebel Chief Strategy Officer
REITs began in the 1960’s as an opportunity for people to own real estate in the form of a tradable security with the hope that inflation would raise their value. Over the course of the following decades, REITs underwent many changes that eventually brought them to the 1991/1992 REIT - the one that Sam Zell dubbs the first one that offers a fair deal to both sides. Zell understood the ability to change fortunes by purchasing properties that were selling for less than they were worth, improving them, and holding them long-term while utilizing the monthly rental income they generated to pay off debt. This is the foundation for our modern-day REIT industry.
REITs can look many different ways. While crowdfunding platforms are an innovative way to share real estate investments costs and divide risk, they each possess various characteristics regarding investment minimums, required accreditation status, fees, and more depending on how they are structured. We want to outline the importance of Regulation A and the difference it makes for investment opportunities.
What is Regulation A and how does it change the game?
“FundRebel can be part of an emerging segment of industry that is able to capture the desire, that emotional will people have (to invest) and offer the first window in. The truth of the matter is, that in the United States, everybody has the chance to be whatever they want to be. To get in… all you need is the little crack in the door. FundRebel can be the crack in the door.”
- Allen Konstam, FundRebel Chief Operations Officer
The qualification for an individual to become an accredited investor, with the idea being that financially-successful people are able to judge and participate in sophisticated offerings, is meeting one of the following:
- Income: an individual must have made more than $200,000 (or $300,000 with spouse) for at least two years
- Net worth: individuals must be worth at least $1 million, excluding their private residence
- Professional credentials: if someone holds certain professional designations or licenses
- Insider status: people who work for an entity that offers non-registered investments
Though real estate investing can be incredibly lucrative, many Americans don’t quite make the qualifications (in 2020 there were less than roughly 11% of households!). FundRebel has a status of Tier 2 Regulation A, meaning that in a 12-month period the investment fund can raise up to $75 million across both accredited and non-accredited investors (a non-accredited investor can only contribute up to 10% of their net worth/annual income). With Regulation A legislation layered on to the crowdfunding investment model, REIT real estate investing changes the game. Regulation D is the traditional structure of a more highly-regulated fund that requires every investor to be accredited.
The premise for FundRebel is all-access to real estate investing for the average American worker. Regulation A offers us the flexibility to invite everyone to the investment table with as little as a $1000 minimum investment (plus, no fees!), and to deliver even more value through the secondary marketplace. FundRebel is attractive to all kinds of buyers. It offers accessibility, liquidity, flexibility, and direct ownership in properties that can grow portfolios and change wealth.
We believe in people like you charting your own destiny through emerging investment opportunities. We present you the opportunity to be an owner.
The chance to be #RebelMade.