Kim Lisa TaylorSecurities Attorney, Founder, Syndication Attorneys, PLLC · Corporate Securities Attorney, 2x Best-Selling Author, Nationwide Speaker | Private Placement

Here’s the truth about 506(c) real estate deals

5 Nov 2025 · 2 min

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In this segment, the speakers explain how accredited‑investor verification works for Rule 506(c) private‑placement offerings. They clarify that proof of accreditation is not required at the initial inquiry but only when the investor signs a subscription agreement and sends money. Acceptable proof can be a letter from the investor’s CPA, attorney, or financial advisor, or a verification letter from a third‑party service that collects financial data and issues a qualified letter. The conversation also covers the five‑year re‑verification rule: once an investor has been verified, the sponsor only needs to reconfirm the investor’s status every five years, asking the investor to reaffirm that the original information remains accurate. At the five‑year mark a new verification is required because an investor’s income or net‑worth may have changed. The speakers note that this periodic check simplifies ongoing administration for sponsors while ensuring compliance with the accreditation definition.

Chapters

For accredited investors investing in Rule 506 offerings, you don't have to do the proof until you make the investment. So it's not like you have to every time you fill out a form, you know, they're going to ask you, are you accredited? You can say yes, but you're not going to have to provide proof of that until you actually, you know, fill out a subscription agreement for a specific offering. And, you know, they've asked you to send in your money. And at that point, you're going to provide that proof, which could be just a letter from your own CPA, attorney, financial advisor, or it could— you can go to some third-party services that'll do it for, you know, $50 or $100, and you have to just give them some financial information and they'll produce a letter from an attorney, CPA, or someone with a license to vouch for you. And once you invest with— let's say someone invests with you, Peter, as an accredited investor, and they've gone through the verification process for your 506 offering, Well, they don't have to keep— if they want to invest with you again in the future, they only have to renew that every 5 years. Each new swap, and you're going to ask them to reaffirm that the information they provided when they did their confirmation was still, you know, is still correct. And as long as you do that, you're fine. And then at that 5-year mark, they're going to say, hey, we've got to, we've got to do it again. Why? Because, you know, people's situation change. And that's why you see put that rule in there. You know, if you retire, you're no longer at that same income level. You know, maybe you're not accredited anymore by income, but maybe by then maybe you've accumulated enough net worth. So, you know, you're just trading one, one definition for another.
Now with the 5-year lookback, it makes things a little easier from an administrative standpoint.