High-net-worth individual (HNWI) is a term used in various financial circles to describe individuals with a significant amount of wealth. For a real estate investor to be categorized as an HNWI, he must own liquid assets (cash or assets that can easily be converted to cash without being devalued) of at least $1 million. For a real estate investor to be considered HNWI, their liquid assets can not include property, durable goods or collectibles like art.

Key Points

• A high-net-worth individual is a person that has liquid financial assets at least $1 million.
• The United States has over 6.5 million HNWI, the largest number for any country in the world.
• HNWIs often get better benefits and special deals for wealth managers and commercial real estate investment companies.

There are three main classes of HNWI:

• High Net Worth Individuals: These are people who own liquid financial assets of at least $1 million.
• Very High Net Worth Individuals: These individuals have liquid financial assets of at least $5 million.
• Ultra-High Net Worth Individuals: These are individuals with liquid financial assets worth at least $30 million.

People who have more than $100,000 but less than $1 million in liquid financial assets are regarded as sub-high-net-worth individuals or sub-HNWIs.

High net worth individuals often rely on wealth managers and financial advisors to manage their finances. They are a prized part of the finance and real estate ecosystem. Institutions compete for their patronage. HNWI are often given special deals, discounts and benefits by financial institutions and investment companies.

Real Estate Investment for High Net Worth Individuals

Most HNWI are real estate investors. This is because commercial and residential real estate has produced consistent returns over the years. Also, because of the changing investment landscape, HNWIs now have a wider range of assets— more than at any other time in the history of investment. However, many of the newer assets (cryptocurrency, NFTs) are quite volatile. Placing some portion of their wealth in real estate — which has traditionally been a more reliable type of investment — has become even more necessary.