Accredited Investor vs. Qualified Purchaser
Accredited investor and qualified purchaser are two SEC investor tiers; a qualified purchaser meets a much higher bar, generally $5 million in investments.
Definition
Both terms describe who may buy certain private investments, but they sit at different levels. Accredited investor is the more common, lower threshold: $200,000/$300,000 in income or $1 million in net worth. Qualified purchaser is a much higher bar defined under the Investment Company Act, generally an individual or family owning at least $5 million in investments, or an entity managing $25 million.
The distinction matters for fund structure. Offerings under Section 3(c)(1) can admit up to 100 accredited investors, while 3(c)(7) funds may admit an unlimited number of qualified purchasers. Most DSTs and Opportunity Zone funds require only accredited status, so the higher tier rarely comes up for typical 1031 investors.
In short, every qualified purchaser is accredited, but few accredited investors reach the qualified-purchaser threshold. Sponsors choose the standard based on the fund they are structuring.
Key points
- Accredited investor is the lower, more common threshold
- Qualified purchaser generally requires $5 million in investments
- Qualified purchaser is defined under the Investment Company Act
- 3(c)(7) funds admit unlimited qualified purchasers; 3(c)(1) caps accredited investors
- Most DSTs require only accredited status
Related terms
Jerry Baker founded Baker 1031 Investments to help exchange investors move from active property ownership into passive, institutional-quality real estate through DST, 721 exchange, mineral royalty, and Opportunity Zone strategies. He holds the FINRA Series 22 and Series 63 registrations and the Securities Industry Essentials (SIE) qualification. Read full bio →
Reviewed by the Aurora Securities, Inc. compliance team — Aurora Securities, Inc., member FINRA/SIPC. Last reviewed July 2026. Securities are offered through Aurora Securities, Inc.; Baker 1031 Investments, LLC is independent of Aurora Securities, Inc.
This glossary entry is educational and is not investment, tax, or legal advice, or an offer to sell or a solicitation to buy any security. Definitions are general and may not reflect your specific circumstances — consult your own CPA and attorney. Past performance does not guarantee future results.