Accredited Investor vs. Qualified Purchaser vs. Qualified Client
An accredited investor meets the Regulation D test (for an individual, more than $200,000 of income, $300,000 with a spouse, or more than $1 million of net worth excluding the home). A qualified purchaser is a higher, separate test under the Investment Company Act, generally $5 million in investments for an individual, and a qualified institutional buyer (QIB) is an institution with at least $100 million in securities. A qualified client, a test under the Advisers Act, sits between them at $1.4 million managed by the adviser or more than $2.7 million of net worth.
For a typical single-property apartment syndication, only the accredited investor test usually matters. The others come into play when a sponsor runs a fund, or charges performance fees as an investment adviser. Rules are as of October 2026.
How do the four tests compare?
| Topic | Accredited investor | Qualified client | Qualified purchaser | Qualified institutional buyer |
|---|---|---|---|---|
| Rule | Securities Act, Regulation D Rule 501(a) | Advisers Act Rule 205-3 | Investment Company Act Section 2(a)(51) | Securities Act Rule 144A |
| What it unlocks | Buying in Rule 506 offerings (506(c) requires it of every buyer) | A performance fee from an adviser registered or required to register with the SEC | Investing in a fund that relies on Section 3(c)(7) | Buying restricted securities in Rule 144A resales |
| Individual threshold | Income over $200,000 ($300,000 joint) in each of the last two years with the same expected, or net worth over $1 million excluding the primary residence, or a Series 7, 65 or 82 license in good standing | At least $1,400,000 managed by the adviser right after the contract, or net worth over $2,700,000 excluding the primary residence, or a qualified purchaser | At least $5,000,000 in investments | Not available to individuals |
| Entity threshold | Several routes, such as total assets over $5 million or all owners accredited | Same dollar tests, or qualified purchaser status | Family company with $5 million in investments; other entities investing at least $25 million on a discretionary basis; certain trusts | Generally at least $100 million in securities of unaffiliated issuers ($10 million for registered dealers) |
| What is counted | Income, or assets minus liabilities | Assets with the adviser, or net worth | Investments as defined in Rule 2a51-1, minus debt taken on to buy them | Securities owned and invested on a discretionary basis |
The qualified client figures come from the SEC's order of April 28, 2026 (Release IA-6961), effective June 29, 2026, which raised them from $1,100,000 and $2,200,000 to reflect inflation. Contracts entered into before that date generally keep the old tests under the rule's transition provisions.
Is a qualified purchaser always an accredited investor?
Not by definition: they are different statutes with different measures. In practice, an individual with at least $5 million of investments (after deducting any debt taken on to buy them) usually also has a net worth above $1 million excluding the home, so most individual qualified purchasers are also accredited. Large debts that were not taken on to buy investments are the exception to watch, because the net worth test subtracts them and the qualified purchaser test does not. The reverse does not follow: being accredited says nothing about holding $5 million of investments.
The difference matters for entities. An LLC formed to buy one fund interest might fail the accredited investor $5 million total assets test because it was formed for the purpose, yet it can still be accredited if all its owners are. The qualified purchaser rules have their own look-through and formation limits. Check each test separately.
Does qualified purchaser status include a primary residence?
No. The qualified purchaser test counts "investments" as defined in Investment Company Act Rule 2a51-1. Real estate counts only if held for investment, and the rule says real estate is not held for investment if the prospective qualified purchaser or a related person uses it for personal purposes or as a place of business. A home you live in is used for personal purposes.
The rule also deducts outstanding debt incurred to acquire the investments. So a person with a $3,000,000 brokerage account, a $2,500,000 rental property with a $1,000,000 mortgage taken out to buy it, and a $1,500,000 home has investments of $3,000,000 + $2,500,000 - $1,000,000 = $4,500,000 (hypothetical, for illustration only). The home does not count, and this person is not a qualified purchaser, though they are clearly accredited.
The accredited investor net worth test also excludes the primary residence as an asset, and excludes the mortgage on it up to the home's value (with a rule for debt added in the 60 days before the sale).
Which test matters for an apartment syndication?
Accredited investor, almost always. A single-property syndication sells interests under Rule 506(b) or 506(c) (see 506(b) vs. 506(c)). In 506(c) every buyer must be a verified accredited investor; in 506(b) up to 35 non-accredited but sophisticated buyers are allowed in any 90 days, with extra disclosure.
Qualified purchaser, only for some funds. The Investment Company Act reaches issuers mainly in the business of investing in securities. An LLC whose main asset is one apartment building generally is not one. A sponsor who runs a fund that holds interests in other entities or funds may need an exclusion: Section 3(c)(1) (up to 100 beneficial owners) or Section 3(c)(7) (every owner a qualified purchaser, no cap). The sponsor's side of that choice is in Investment Company Act 3(c)(1) and 3(c)(7).
Qualified client, only for advisers. Section 205(a)(1) of the Advisers Act bars an adviser registered or required to be registered with the SEC from taking a share of a client's capital gains, and Rule 205-3 lifts that bar for qualified clients. For a fund under Section 3(c)(1), each equity owner charged the fee counts as a client. A sponsor who owns and runs a property directly is usually not an investment adviser at all, as syndicator investment adviser registration explains, so its promote is not tested against Rule 205-3. A fund manager who is an SEC-registered adviser is.
QIB, rarely. Rule 144A governs resales of restricted securities to large institutions. It does not come up when a sponsor raises from friends and followers.
Four investors compared
Four hypothetical investors, for illustration only, each considering an apartment deal and a 3(c)(7) real estate fund.
| Investor | Facts | Accredited? | Qualified client? | Qualified purchaser? |
|---|---|---|---|---|
| A | $250,000 income for three years, $400,000 net worth | Yes (income) | No | No |
| B | $1,800,000 net worth excluding home, $1,200,000 of it in investments | Yes | No ($1.8M is under $2.7M) | No |
| C | $3,100,000 net worth excluding home, $2,900,000 in investments | Yes | Yes (net worth over $2.7M) | No |
| D | $6,000,000 in brokerage and rental property after acquisition debt | Yes | Yes | Yes |
All four can buy into a 506(c) apartment deal once verified. Only D could invest in the 3(c)(7) fund. And if the fund manager is an SEC-registered adviser charging a performance fee, only C and D could pay it.
What should an investor ask?
- Which exemption is the offering using, and which investor test does it require of me?
- Is the issuer a fund relying on 3(c)(1) or 3(c)(7), or a single property?
- Is the manager a registered investment adviser, and does it charge a performance fee?
- How will my status be verified, and what will I have to provide?
Every investment can lose money, and meeting a higher test does not make a deal safer.
How DoorRaise fits in
DoorRaise helps sponsors raise equity for single apartment buildings with 5 or more units from their friends and followers, under Rule 506(c) by default or 506(b), and takes verified accredited investors only. It does not run 3(c)(7) funds or check qualified purchaser status. Investors verify by an adviser's or broker's letter, a Series 7, 65 or 82 license, income or net worth documents, or a minimum investment; see the accreditation feature. Fees are $1,500 to set up (non-refundable), $5,000 at closing (only if the deal closes) and $3,500 a year.
Raise your apartment deal from the people who already follow you.
DoorRaise is built for apartment buildings with 5 or more units: one link for the deal, escrow until closing and a standard fee card.
Sponsors can compare the fee card before they start.
FAQ
What is the difference between an accredited investor and a qualified purchaser?
An accredited investor meets Regulation D's income, net worth, license or entity tests. A qualified purchaser meets the Investment Company Act's higher investments test, generally $5 million in investments for an individual, and is needed for 3(c)(7) funds.
What is the difference between an accredited investor and a qualified client?
A qualified client is an Advisers Act test for performance fees: at least $1.4 million managed by the adviser or more than $2.7 million of net worth (as of the June 29, 2026 adjustment), or qualified purchaser status. Accredited investor is the lower Regulation D test.
What is the difference between an accredited investor and a QIB?
A QIB is an institution owning and investing at least $100 million in securities of unaffiliated issuers (with lower amounts for registered dealers). Individuals cannot be QIBs. Accredited investor covers both individuals and entities at much lower levels.
Is a qualified purchaser always an accredited investor?
Not automatically. The two tests are separate, though an individual with $5 million of investments usually also clears the $1 million net worth test. Check each test on its own terms, especially for entities.
Does qualified purchaser include a primary residence?
No. Real estate used for personal purposes is not an investment under Rule 2a51-1, and debt taken on to buy investments is deducted.
Sources
- 17 CFR 230.501, accredited investor (Cornell LII)
- 17 CFR 275.205-3, qualified client (Cornell LII)
- SEC Release IA-6961: Order approving adjustment for inflation of the dollar amount tests in Rule 205-3 (April 28, 2026)
- 15 U.S.C. 80b-5, Advisers Act Section 205 (Cornell LII)
- 15 U.S.C. 80a-2(a)(51), qualified purchaser (Cornell LII)
- 17 CFR 270.2a51-1, definition of investments (Cornell LII)
- 17 CFR 230.144A, qualified institutional buyer (Cornell LII)
- 15 U.S.C. 80a-3, investment company definition and exclusions (Cornell LII)
This article is general information as of October 2026, not legal, tax or investment advice. Confirm which tests apply to your offering with your own securities attorney. Every investment can lose money. DoorRaise is not a law firm, broker-dealer, investment adviser or funding portal.