March 9, 2007
The SEC has posted a proposed rule that would raise the minimum net-worth requirement needed to invest in private funds from $1,000,000 total net worth to $2,500,000 liquid net worth. When the $1,000,000 figure was set in 1982, 1.87% of all U.S. households were quailified to invest in private equity offerings. This reduces the investors eligible to invest in private placements by almost 88%, or to just 1.29% of households. It is not fair to assume those with less than $2,500,000 liquid net worth to be unable to understand the risks in real estate private placements that build single family homes, condominiums and townhomes, operate a strip center or an apartment project or an apartment project or develop a medium sized office building. This diversification opportunity has served me well over the last 33 years and I believe should be made available to more smaller investors not fewer. Small investors like me typically invest $25,000 to $100,000 in private real estate investments. If it ain't broke, don't fix it