Episode Transcript:  

 There's a new bill making its way through Congress that can really reshape people's access to private investments, and it's got a lot of people talking. It's called the Equal Opportunity for All Investors Act of 2025. But is it really a great idea or not? We're gonna unpack that and more on today's episode.

Let's get REady2Scale.

Hey guys, my name is Jeannette Friedrich. I'm the director of investor Relations here at Blue Lake Capital, where we specialize in private real estate, specifically multifamily investments across the United States. Now I wanted to talk about this bill because there's been a lot of discussion behind the scenes about people wanting this to happen for years and years and years, and basically, first of all, I'm gonna talk about what the bill is and why it's creating such a stir.

So the way that private investments work, whether you're talking about private equity, real estate, uh, venture capital or private equity, is those that participate in these types of deals have to be what is what is considered to be accredited. To be accredited, you have to make at least $200,000 a year as an individual, have previously have made that with the expectation of also making that in the future or $300,000 a year as a married couple.

In addition to that definition, you can also qualify if you have $8 million net worth excluding your primary residence. So we're talking about a certain income monetary guideline before investors can get into certain types of deals. Now this bill proposes to eliminate that and instead creates a streamlined test that allows anyone to become an accredited investor if they can pass this test or take special training that is provided to them.

Now, obviously the intention of this is to try to create, quote, equal opportunity, but is it really equal? So there's three reasons why a lot of people are celebrating this bill potentially passing. The first reason is obvious. It's going to give everybody the opportunity to the same tools that the wealthy exclusively already have access.

To, so for example, in an average real estate investment, it's not uncommon for us to actually have some pretty nice returns. For example, historically our track record is a 33% average annual return on our real estate investments. Now, regular people that can't access those types of opportunities only be, have the options of looking at, say, a savings account or a high yield savings account.

It may be what. 4%, 5%. That's a miserable return comparison to what we can potentially capture in real estate. So this would actually allow everybody the opportunity to use the same tools to be able to build on their incomes and maybe even wealth. Now, the second reason why a lot of people really like this is because also in addition to that.

A lot of people are locked into thinking that the only way they can make investments is through a 401k or the stock market when indeed there's this whole other world of investments people don't really know exist. So this will help people be able to actually diversify away from a stocks only or 401k and stocks only strategy, and be able to actually implement a much more diverse strategy, which is also generally a win.

Now the third reason why a lot of people think this is also really great, and I am one of them, is it encourages financial education. Financial literacy in the United States is grossly lacking among many people, even those that that are wealthy. And this is a really great way to help stimulate and streamline financial literacy and education in the United States.

So while there are some good things about this bill potentially passing, there's also some very serious consequences that I think it's very important need to be said out loud. So the first one is, is typically these types of investments are a rich man's game because it's a. For wealthy people, it is not the same level of risk for someone that has a million dollar net worth and someone that has a maybe a hundred thousand dollars net worth to be sitting at the same table, taking the same types of risk together.

If there's a loss of capital, that is going to significantly impact an everyday investor much more than somebody that has a million dollar net worth and then some. So that is one thing that I think is very important, is that while it is making the opportunities equal, it is not making sure that the impact is equal Also.

Now, another thing that you wanna take into consideration is that by doing this, unfortunately, it's very likely that you're gonna see a significant uptick in bad actors. And I mean, I'm talking fraud, I'm talking scams. I'm talking about people that will take advantage of any opportunity they can to try to scam people out of their money.

And so as a very, very, very, very cautionary. Urging of my own. I encourage anyone that is looking into this, if this bill passes, at getting into investments for the very first time, to be extremely cautious. When you are a green investor, you've never gotten into investments before. There's. So many things that you need to understand about how deals are structured, about track record, about an established sponsor, and how things are structured to protect both you and the sponsor.

There's so many details that need to be taken into consideration to ensure that you're making a good decision. So if this bill passes through and you find yourself suddenly getting into the game, do so very, very carefully. And the last factor that I think is also a concerning about this whole situation is that this is really a false sense of equality, in my opinion.

So now those that have not been considered accredited can simply take a test to become accredited, but those that are already considered accredit accredited don't have to actually prove that they are also financially literate. The reality is. Some people get inheritances or maybe had a really great, strong business that they were able to sell, but that doesn't mean that they necessarily have a tremendous amount of financial acumen or literacy and really know what they're doing.

I think the wiser way that this could be implemented would be for everyone to have to take a test because that would truly protect consumers. In addition to that, I also think that while they are doing some work on the, in the LP side of the house, which is the passive investing side of the house, they should also be maybe doing a little bit more work on the general partner side of the house and putting in some more regulatory framework there too.

Now, certainly not everybody agrees with me, but these are my thoughts and I'd love to hear yours. So let us know what you think in the comments on our YouTube channel. In the meantime, I hope you guys found this helpful and I will see you on the next episode. REady2Scale is brought to you by Blue Lake Capital, where we hunt down the best multifamily investment opportunities that we can find and invite investors to join in with us.

We target class B value add multifamily properties across the Sunbelt. Our CEO Ellie Perlman invest a substantial amount of capital into every deal. This means our interests are aligned with yours. If you're an accredited investor looking to expand your portfolio and diversify sponsors, be sure to visit us@bluelake-capital.com.

Blue Lake capital, be bold, be extraordinary, and keep moving forward.