What is an Eligible Investor?

What is an Eligible Investor? Understanding Your Opportunities

When it comes to investing in real estate in Canada, understanding your investor status—accredited, eligible, or ineligible—opens the door to a variety of investment opportunities. For individuals who meet the criteria as eligible investors, there are options to participate in private real estate deals and other exempt securities, without needing to meet the higher thresholds required of accredited investors.

In this article, we’ll explore:

• The difference between accredited and eligible investors in Canada
• Requirements to qualify as an eligible investor
• The advantages eligible investors have in accessing real estate investments
• Opportunities available on the Parvis platform for eligible investors
• Tips to becoming an accredited investor

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The Difference Between Accredited and Eligible Investors

In Canada, investment opportunities that aren’t publicly traded are often restricted to accredited and eligible investors. While both types of investors have access to private markets, the financial requirements and associated investment limits differ.

What is an Accredited Investor?

Generally, accredited investors are individuals or entities with a high net worth or significant income. As an accredited investor, you can trade securities that are not registered with financial authorities without a cap on the amount of funds you can invest. To be considered an accredited investor in Canada, you must meet any of the following eligibility requirements:

• At least $1 million in financial assets (cash and securities) before taxes. When calculating an individual’s financial assets any outstanding loans incurred to acquire those assets must be deducted.
• A before-tax net income of $200,000 (or $300,000 combined income with spouse) in the two most recent years, and who reasonably expects to exceed that net income in the current year.
• Have at least $5 million in net assets.

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Eligible investors have access to certain private investments without needing the higher net worth of accredited investors.

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What is an Eligible Investor?

Some provinces in Canada break down investors who don’t meet the above criteria into two further categories – eligible and ineligible investors.

Eligible investors have access to certain private investments without needing the higher net worth of accredited investors. However, just like accredited investors, to be considered an eligible investor you must meet certain financial requirements (outlined below). Eligible investors that meet those requirements can invest more into investment opportunities subject to a prospectus exemption than ineligible investors. 

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Who Qualifies as an Eligible Investor?

Eligible investor qualifications are outlined under what is called the offering memorandum (OM) prospectus exemption, which allows companies to raise capital without a full prospectus. Instead, companies provide an offering memorandum––a less detailed legal document than a prospectus. 

Under an offering memorandum exemption, anyone can purchase securities, however, there are limits to the amount that can be purchased that will vary depending on whether an investor is an eligible or ineligible investor. 

To qualify as an eligible investor, individuals must meet specific financial criteria focused on income and net assets:

• Income Requirement: An eligible investor must have a gross income of at least $75,000 individually or $125,000 when combined with a spouse, sustained over the past two years with an expectation to meet or exceed this income in the current year.
• Net Asset Requirement: Alternatively, individuals can qualify as eligible investors if they (or combined with a spouse) have a net worth of at least $400,000. This includes liquid assets and fixed assets (including the value of their primary residence), minus liabilities.

Over a twelve-month period, eligible investors can put a maximum of $30,000 into investments subject to the OM exemption, unless they receive advice from a portfolio manager, investment dealer, or exempt market dealer, in which case they can invest up to $100,000.

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Why Eligible Investor Status Matters

Eligible investor status grants access to private market opportunities with fewer restrictions compared to ineligible investors. Here’s why this matters:

1. Access to a Broader Range of Investment Opportunities: Eligible investors have access to a wider variety of alternative investments, such as private real estate deals, which can offer unique opportunities for portfolio diversification and potential higher returns.
2. Prospectus Exemptions: Under prospectus exemptions like the offering memorandum, companies can offer securities to eligible investors without the need for a full prospectus. This exemption allows companies to raise capital while giving eligible investors access to private investment opportunities that might otherwise be limited to accredited investors.
3. Investment Flexibility with Limits: While accredited investors can invest without limits, eligible investors are allowed to invest up to $30,000 in these exempt investments over a 12-month period. If they receive advice from a registered advisor (like a portfolio manager or exempt market dealer), they can invest up to $100,000.

This tiered structure allows eligible investors to participate in the private market in a controlled and regulated way, supporting their financial growth while managing risk.

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Investment Opportunities for Eligible Investors at Parvis

At Parvis, we offer a curated selection of high-quality real estate investment opportunities accessible to both accredited and eligible investors, including:

• Direct Real Estate Investments: Eligible investors can participate in private real estate deals that provide potential cash flow and appreciation over time.
• Equity Investments: By investing in real estate equity, eligible investors can gain ownership stakes in projects, with the potential for long-term returns aligned with property value increases.
• Debt Investments: Eligible investors may invest in debt-related real estate options, such as private mortgages or real estate debt funds, allowing them to earn interest while contributing to property development and acquisition.

The following opportunities are currently available to eligible investors on the Parvis platform:

• Epiphany Legacy Investment Mutual Fund Trust
• Equivest Development Trust 
• Ginkgo MIC
• Secure Capital MIC
• Metropointe MIC
• Perch Capital MIC
• Lougheed Landmark (OCMI) 
• RealAlt Investments 
• Revesco Properties Trust
• District Property Trust 
• Pier 4 REIT 
• HoneyTree REIT
• Northern Alliance Trust 
• Avenue Living Core Trust
• Vector Mortgage Trust
• Cascadia Green REIT
• Parametric Properties Inc
• Equiton Income & Development Fund
• Equiton Apartment Fund

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From Eligible to Accredited Investor 

Attaining accredited investor status can open access to an even broader range of investment options and wealth-building potential. The good news is that if you already qualify as an eligible investor, you're well on your way to becoming accredited.

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Here are a few tips that can help you earn accredited investor status sooner:

• Continue to make smart investment decisions.
• Diversify your portfolio with direct real estate investment opportunities and varying investment strategies.
• Continue to grow in your career to meet income requirements.
• Work to eliminate debt associated with assets (e.g. mortgage).

Once accredited investor status is achieved, you gain numerous benefits that will help you build more wealth, including:

‍Access to more investment opportunities: As an accredited investor you can build your wealth through lucrative private market investments that are unavailable to retail investors. Additionally, there is no limit to the amount of funds you can invest in these private market opportunities.

‍Higher potential returns: Certain high-risk, high-reward investments are only available to accredited investors, due to their financial qualifications that allow them to take on said risk.

‍Increased diversification: The ability to invest in both public and private markets adds another layer of diversification for accredited investors to help mitigate risk.

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Invest with Parvis

With Parvis, accredited investors and eligible investors can take their real estate investing to the next level with a variety of opportunities that offer high return potential and increased diversification. 

If you’re interested in exploring investment opportunities or want to learn more, create your Parvis account today.

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Eligible Investor FAQs

What is an eligible investor?

An eligible investor is an individual who meets specific financial criteria, enabling them to invest in certain private market opportunities without the higher income or net worth requirements of accredited investors. Eligible investor status allows access to certain exempt securities, typically with investment limits to help manage risk.

How does an eligible investor differ from an accredited investor?

The main difference is in the financial qualifications required. Accredited investors need to meet higher income or net worth thresholds, allowing them unrestricted access to private investment opportunities. Eligible investors, while still meeting financial requirements, are subject to lower thresholds and often have investment limits to ensure risk is managed.

What are the criteria to qualify as an eligible investor?

Eligible investors generally qualify by meeting one of these financial criteria:

• An individual income of at least $75,000 (or $125,000 with a spouse) over the past two years, with the expectation of maintaining or exceeding that income.
• A net worth of at least $400,000 (either individually or with a spouse). These criteria allow eligible investors to access specific private investments without needing to meet accredited investor standards.

What counts toward an eligible investor's net worth?

Net worth for eligible investor status includes both liquid assets (cash, stocks, bonds) and fixed assets, such as the value of real estate holdings, including the primary residence. Liabilities, like outstanding loans or mortgages, are subtracted from the total asset value to determine net worth.

What investment opportunities are available to eligible investors?

Eligible investors can access private real estate deals, exempt securities, and certain funds that provide opportunities for portfolio diversification. These include direct real estate investments, equity stakes in projects, and debt investment options such as private mortgages or real estate debt funds.

Are there investment limits for eligible investors?

Yes, eligible investors are subject to investment limits. Typically, they can invest up to $30,000 over a 12-month period in exempt investments under the offering memorandum exemption. If they receive advice from a registered advisor, such as an exempt market dealer, they may be allowed to invest up to $100,000.

Which provinces recognize the eligible investor category?

The eligible investor category is recognized in certain Canadian provinces, including Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Prince Edward Island, New Brunswick, and Nova Scotia. Investors in other provinces should verify local regulations, as this category may not apply.

How Can Eligible Investors Become Accredited Investors?

Eligible investors can work toward accredited status by:

• Building income through career growth to meet the income criteria ($200,000 individually or $300,000 with a spouse).
• Growing their net worth to $1 million in financial assets or $5 million in net assets.
• Diversifying and strategically managing investments to grow wealth. Reaching accredited investor status can open up additional investment options and remove investment limits.

What are the benefits of being an eligible investor?

Eligible investors have access to unique private investment opportunities typically reserved for accredited investors. This allows them to diversify their portfolios beyond public markets, participate in private real estate, and access exempt securities. These options can improve wealth-building potential and portfolio resilience.

What risks should eligible investors be aware of?

As with any private investment, eligible investors should consider the risk of potential losses. Exempt securities can be less liquid than public investments, and they may lack the regulatory protections seen in publicly traded investments. It's important to perform due diligence and consult with financial advisors when necessary.

How does eligible investor status impact access to private market investments?

Eligible investor status enables greater access to private market investors compared to ineligible investors. While eligible investors don’t need to meet the higher thresholds required for accredited investors, they can still participate in select private market investments. This status allows them access to high-quality investment options with manageable investment limits, offering both opportunities and protection.