Choosing the Right Lot

This investment starts by finding the right lot to build on. In some cases, we find suitable vacant lots, and in other cases, we purchase a lot with a distressed single-family structure that can be demolished to make way for the multi-family structure.

Our real estate experts analyze dozens of properties in growing markets before choosing one with the best potential. We start by finding strong neighborhoods, through a careful evaluation of local market values, rental pricing, and occupancy rates. Then we analyze specific properties, considering location, zoning code, lot size, and buildable square footage. We use our industry connections from years in the business to find the lots with the greatest potential and negotiate the best purchase terms. Our deals can come from our relationships with hundreds of local brokers, or from nontraditional sources, including off-market properties, foreclosures, probate courts, and auctions.

Each property is purchased with a target buyer in mind. Depending on the location of the property and demand in the area, we may aim to sell the entire development to a single buyer, or we might sell the property to multiple buyers as a Tenants-in-Common (TIC) property or as individual condo units.

Every property goes through an extensive due diligence process before purchase. Our experts estimate the building costs in comparison to the after-construction value to ensure a profitable result.

To maximize returns and mitigate risk, we focus on developing small apartment buildings. Not only are smaller projects faster to build, but it’s also easier to get the required building permits. The shortened development timelines allow us to more accurately project returns. And smaller buildings are in higher demand because they appeal to a wide range of buyers. This means we can sell the building and distribute proceeds to investors faster.

Securing the Property

We negotiate to buy the chosen property under favorable terms. We strive to get the lowest purchase price so that we have the greatest possible profit margin to work with. With our established relationships with local lenders, we can get better terms and lower interest rates on our construction loan. Because we build multiple properties each year, we are also able to negotiate favorable discounts on labor and materials for the construction.

When our real estate experts are satisfied that we have a winning property for our investors, we open the LLC in which the property will be held, secure the financing, complete all title and escrow documents, and successfully close the deal.

Designing the Property

Gatsby’s multi-family developments are designed to meet the unique needs of today’s buyers and renters in growing metro markets.

The design, layout, and finishes we choose depend on the exit strategy of the property. Some properties are developed to be sold as a whole to one single buyer, while other properties are designed to be sold to multiple buyers as TICs or condos. We tailor each property to the eventual buyer.

For the properties that are designed as TIC and condo developments, we create units that feel like home; we want to appeal to individual buyers who are looking for a unit to call home for the long term. These buyers want higher quality, more privacy, and a homey feeling. So we target residential locations, preferably with a mix of single-family and multi-family residential, and we design high-end units to meet buyer expectations.

For multi-family developments sold to one buyer, we implement a completely different strategy, creating units that will appeal to the eventual renters. By developing units that will be in demand by renters, we create demand from individual investors who wish to buy the property as a rental investment. To tailor our developments to today’s renters, we build large units with multiple bedrooms of equal size, each with an ensuite bathroom. This layout is ideal for today’s “co-living” trend in which renters are living with multiple roommates to split the rent and make housing more affordable. Similarly, growing families who have been priced out of the housing market are looking for large apartments with enough space to accommodate multiple children plus a home office.

To make sure our buildings are in high demand with investor-buyers, we choose amenities strategically. We avoid high-cost, high-maintenance amenities like pools, fitness centers, and elevators. And we include low-maintenance amenities that offer a competitive advantage, like extra parking, in-unit laundry, and rooftop decks.

Building the House

When the designs are complete, we begin the permit process. Once the building permits are approved, our construction team can get to work building the structure on the prepared lot in accordance with the architect’s design.

Selling the Property

When the construction is complete, we stage the home, take final photos of the property, list the property on the market for sale, and advertise it to qualified buyers.

Timeframe

A home development project takes approximately 18-24 months. The timeline starts the day we open escrow for purchasing the property, followed by designing and permitting, construction, and then finishing with the property sale. Once the property has sold and escrow closed, Gatsby sends the disbursements to investors within 30 business days.