Real Estate Investing Questions & Answers

Gatsby Investment has a strong market niche, specializing in small to medium-sized projects with shorter timeframes and limited risk. We focus on value-add and ground-up construction projects where we can quickly raise the property value and increase the profitability of our investments under any market conditions.

Our key project type is multi-family new development with 4-6 units, but we also offer the following:

• Single-Family House Flip
• Single-Family Development
• Multi-Family Development
• Multi-Family Value-Add TIC
• Multi-Family Value-Add Rental
• Multi-Family Build-to-Rent

Our software and team are set up to handle each of these project types, but we always adjust to suit changing market conditions. Our goal is to focus on whichever property type has the best potential return for our investors at any given time.

Current and past investors have published reviews online, which we warmly invite you to review so you can learn more about the experiences of real-world investors working with Gatsby. Having said that, we keep our investor’s personal information completely confidential, so we do not provide direct references outside of the reviews posted online by the investors themselves.

Absolutely! You can explore online reviews via the Better Business Bureau (BBB), as well as our Google Business Profile page and Facebook profile.

Yes, Gatsby is registered with, and proudly accredited by, the BBB. View our BBB profile for more information.

No. The real estate opportunities listed on our platform are not intended to be used in 1031 exchange transactions.

Gatsby does not currently offer a referral program or pay referral fees. But we truly appreciate investors’ help in spreading the word to friends and family. This exposure helps us grow as a company and allow us to offer more projects to our investors.

Our team of specialized experts handles every detail of your real estate investment, including:

• Market research
• Location scouting
• Analyze potential deals
• Opening and managing LLCs
• Buying the property
• Handling escrow
• Securing the loan and refinancing
• Planning the architectural design
• Obtaining the appropriate city permits to build
• Identifying building materials
• Managing the construction team
• Renovating/building the structure
• Stabilize the property
• Handling the ongoing property management for rental properties
• Project status updates to investors
• Customer service
• Marketing and selling properties
• Handling all financials, accounting, and Schedule K-1 filing
• Making prompt proceeds payments to investors

We take care of the real estate investment process from start to finish, allowing you to maximize your ROI potential from the comfort of your home.

Here is a step-by-step guide to investing with Gatsby Investment.

1. Sign up

Creating an account takes less than a minute. You just need to provide some basic info and confirm your email address. Once you have created an account, you have full access to all the information on our website, including investment details, financials, and the full track record of completed deals.

2. Get verified

To invest with Gatsby, you need to be verified as an accredited investor in accordance with SEC policies. You can apply for verification and provide proof of income or net worth through our online application. You will be notified of the results of your application via email, typically in just one day.

3. Invest

Find investment properties that meet your goals. You can use the ROI calculator feature to view your estimated return on any investment. And when you find the right property, you can easily place the investment online. Our system will guide you through the investment agreement and provide wiring instructions.

4. Wire the funds

To secure your place in your chosen investment, you simply need to transfer the funds via wire transfer or ACH to Gatsby’s secure account within five business days of placing your investment order online. You will get an email confirming that your investment is active as soon as we receive your funds.

5. Track your investment

You can easily track your investment through your online dashboard. A progress meter will show the current status of the project as well as a percentage of completion. Gatsby uploads construction photos to your online dashboard regularly so you can follow the progress of the project. You will also receive email updates as your investment moves from one status to another.

6. Property sale

When the project is complete, Gatsby’s team of real estate sales experts lists the property on the market for sale. We advertise the property to a wide range of qualified buyers, looking to drive the sales price as high as possible. Gatsby reviews all offers and accepts the offer from the highest bidder. We then inform investors once the property is sold.

7. Disbursements

Gatsby will send the investor distributions within 15 business days after the property has sold. The funds will be sent via wire transfer to the account you have listed on your Gatsby profile. After receiving your funds, you have the option to reinvest them in another property to continue growing your wealth.

Click here to learn more: How it Works

Gatsby Investment is primarily an online investment platform, and our business model and software solutions are designed to allow investors to place investments and track them from the comfort of home. In an effort to streamline processes and maximize returns, we provide investment updates directly via the online platform’s investor dashboard. Additionally, Gatsby’s Investor Relations team is available for phone calls and Zoom meetings.

Having said that, if you would still like to come to our Beverly Hills headquarters and meet with us, we welcome appointments with all accredited investors. Before making an in-office appointment, you can complete the accredited investor application online to confirm that you are a qualified accredited investor. Then you can schedule an appointment to meet with us at the office. Please note: Gatsby does not accept walk-in appointments.

Gatsby has been in the industry for many years and has strong relationships with local real estate agents and brokers. Our properties can come from active market listings but are just as likely to come from off-market deals, such as foreclosures, probate courts, and auctions.

We believe in quality over quantity! Every investment opportunity posted on the website has gone through an extensive due diligence process performed by real estate experts and analysts to make sure we only bring the deals with the greatest profitability potential to our investors. We typically look for properties with transformation and value-add potential, as well as ground-up construction opportunities.

Before we make an offer on any property, our team of real estate experts and analysts conducts heavy due diligence to ensure high profitability potential and mitigate risk for our investors. The due diligence process for each property includes the following:

• Analyzing property comps: We compare the value of similar developments in the area with the subject property.
• Checking the rent roll: We review rental income and vacancy rates.
• Transformation potential: We check for value-add potential and new construction opportunities.
• Zoning code: We check the setback and zoning code with the city to find out what we can build on the land.
• Cost-to-build: We estimate the construction and material cost, in comparison to the anticipated sales price.
• Location: We physically walk the site and drive the surrounding area in person to get the look and feel of the neighborhood.

Gatsby works with a large team of respected real estate agents and brokers to advertise and sell our completed properties. This team of agents has extensive experience selling properties in Los Angeles with specialized knowledge of our specific property types. Gatsby has a solid reputation in the market and investor-buyers (and their agents) pay attention when we list a property for sale.

The goal isn’t just to sell the asset, but to command the highest possible price and best possible terms on the sale.

We do not offer to sell properties directly to investors in the deal. To ensure that we get the highest sales price possible and act in fairness to all investors in the project, we always list the property on the open market for sale to the highest bidder.

There are multiple ways to invest with Gatsby Investment. You can invest as an individual, an entity, a trust, a retirement account, or a fund. Learn more about ways to invest.

The contracts and agreements provide legal assurances for the investors relating to the handling of funds.

All funds from investors are held in a non-interest-bearing account for the benefit of the investors. Each property is held in its own LLC with its own bank account.

Gatsby Investment maintains an impeccable track record of completed deals. We are proud to say that since the start of the company in 2016, we have never lost money on a single investment. 100% of our investors have received their initial investment returned, along with a profit.

As with any investment, profits cannot be guaranteed. However, Gatsby’s stringent due diligence policies are designed to minimize risk and maximize return potential for investors.

Once you place your investment(s), you will be provided with instructions to complete an online wire transfer or ACH. You will have 5 business days to complete the transfer to activate your investment. For wire transfers, there is a unique reference code, marked in red. Make sure you include this code when wiring the money.

Please note that if you have a daily wire transfer limit, you can do multiple wires on separate days until you reach your total investment amount. In this case, make sure you include the same reference code in all your wires.

Your investment starts the day you place the investment. As an example, let’s say you placed an investment on Jan 26th, but sent the wire transfer 5 days later. Your investment would still be listed with a starting date of Jan 26th, but the status would not change to “Active” until we received the investment funds via wire transfer or ACH. Investors receive a confirmation email once the funds are received and the investment is active.

For investment projects that include a rental period, investors will receive quarterly disbursements from any rental income during the rental phase.

For flipping projects or new developments that are built-to-sell, no income is generated until the property is sold. For those projects, investors receive their disbursement as a lump sum once the project is complete.

After a project is completed and sold, Gatsby sends the distributions to investors within 15 business days. Investors can expect the funds to arrive via wire transfer to the bank account listed on their Gatsby investor profiles.

You can open a second account with Gatsby, using a different email address than the one used originally. If, for example, you have an account as a private individual and want to start investing from an entity, you can open a separate account for your entity. This way, you can keep your private account as is, and have a second account under your entity.

Please note: the sign-up process will be the same for the second account as for the first account. This includes the accreditation process. Even if you already have an account that is verified, you will need to apply for accredited investor verification for your new account. After you have signed up, it will take you step-by-step into the accredited application where you can select how you want to invest and enter your new profile information.

Click here to open your account.

Once you have placed an investment and your investment has become active (meaning we have received the funds), we kindly ask you to go to the My Profile page to complete the setup of your account.

We will need the following information from you:

• A signed IRS Form W-9 for tax purposes.
• Your bank account information so we can send investment disbursements to you.
• An emergency contact person on file.

After placing an investment, you will need to wire the funds to secure your place in the project. Please go to the Account tab and click on Wire Transfers to find the wiring instructions. We can accept funds via wire transfer and ACH.

You have five business days to send the funds to activate the investment. When we receive your funds, you will receive an email to confirm that your investment is active. (We typically need 2-3 business days to process the payment after we receive your funds.)

When your investment becomes active, you can track the investment from start to finish through the online dashboard. Go to the Account tab, then click on My Investments. This is where we update the progress meter, provide monthly status notes, and upload construction photos to allow you to follow the project's progression. You can also view and download all relevant agreements and certificates from that page.

Gatsby Investment’s strategy is to develop much-needed housing that appeals to today’s buyers and renters. We currently have a strong niche in the ground-up construction of small multi-family properties. Our success in the multi-family new development market is based on the following factors:

1. Adding value based on zoning law changes

The shortage of housing in Los Angeles prompted zoning law changes that allow property owners to convert certain single-family lots into multi-family developments of 4-10 units. This means developers can build more units in less space, which creates more housing in central areas, where it is needed most.

Through our industry connections, we can find and purchase affordable single-family lots below market rate. With our efficient construction systems, we can quickly complete development and list the new building for sale.

2. Setting selling prices based on rental income

Unlike single-family homes, which use sales comps to set prices, multi-family development prices are based on potential rental income. This means that multi-family listings are not as reliant on market conditions and market rates. Even if single-family home values were to drop, rental prices generally remain steady (or may even increase), which causes the sales price of multi-family properties to increase.

3. Meeting market demand

By building new developments that perfectly align with growing demand trends, we are able to generate strong returns, even in a stagnating market.

LA is a market of renters. And with increasing housing costs, today’s renters are looking to split the rent among multiple roommates. But to do this comfortably, they need large, 3-5 bedroom units, with all rooms being around the same size and each room coming with its own en-suite bath.

Interestingly, around 75% of the apartment inventory in LA has two bedrooms or fewer. So, but developing spaces specifically for shared living situations, we can meet existing demand.

4. Maintaining professional relationships to get the best deals

Gatsby has been in the industry for many years and has strong relationships with all the right people.

Through our connections with local real estate brokers, for example, we’re able to get access to off-market deals, which may be priced below market. Through our banking relationships, we are in a position to negotiate the best possible rates. And with the volume of properties we handle, we can also negotiate deals with the best builders and designers in the area. Getting good deals at each step of the process means higher profitability potential for our investors!

Gatsby’s multi-family properties are in demand by the following groups:

• Individual investors. Individual property investors who are looking to build a real estate portfolio of rental properties benefit from cash flow, tax benefits, and property appreciation over time.
• Institutional investors. Real estate funds, private equity, and other large companies and institutions purchase properties in bulk for their portfolios to hold long-term.
• Private buyers who plan to occupy one of the units. Some buyers choose to live in one unit and rent out the remaining units to offset part of their mortgage payment with passive rental income. Multi-family properties with four units or fewer are still classified as residential property (as opposed to multi-family commercial property). If the owner opts to occupy one of the units, they can qualify for favorable financing, with lower down payment and credit score requirements than multi-family investment properties.

Single-family homes with ADUs (Accessory Dwelling Units) are in demand by the following groups:

• Individual investors who are looking to build a real estate portfolio of properties and rent out both units separately to benefit from cash flow, tax benefits, and property appreciation over time.
• Institutional investors who understand that they can get multiple streams of income as well as impressive appreciation on this type of residential property.
• Private buyers who plan to occupy the property (in whole or in part). ADU properties are favorable for private buyers because they are still classified as residential property (as opposed to multi-family commercial property). Owner-occupied residential properties offer favorable financing for the buyer, with lower down payment and credit score requirements than multi-family properties. This appeals to:
• Buyers who want to live in one unit and rent out the second unit to offset part of their mortgage payment with passive income from the rental of the ADU.
• Parents of young adults who want a separate living unit for their grown children.
• Multi-generational households with aging parents who still want some independence.
• Buyers who are new to the area and want to keep a guest house ready for their out-of-town visitors.

In the interest of maximizing profits for investors, Gatsby does not employ an in-house construction team.

Instead, we partner with experienced general contractors and teams of skilled builders. This allows us to engage multiple teams when multiple projects are in progress and avoid unnecessary payroll expenses during brief periods between construction phases of projects.

Gatsby has in-house project managers and operations managers to supervise every project. Additionally, Gatsby handles all property inspections and construction draws, selects the material and finishes, and signs off on the completed construction project. So we are highly involved in the process from start to finish.

We work with the same construction teams repeatedly, which allows for easier communication and increases efficiency. We only work with well-established builders and construction workers who have a long track record of completing successful builds.

Does the construction work on a project have to wait while the funds are being raised?

No. Gatsby makes sure that a project is never delayed because of funding.

Gatsby Investment provides the funds upfront as needed so that a deal can proceed as scheduled. The investment is kept open on the website to let more investors join the project as it progresses. And, as more investors join the project, Gatsby’s original funds are replaced by the new investors’ funds.

This is why all investment returns are prorated based on the time each investor joins a deal.

Gatsby Investment is the syndication sponsor and managing member in each deal. This means we manage each project from start to finish. We carefully analyze potential deals, complete due diligence work on likely deals, and choose only the deals with the greatest potential for our investors. We then create the LLC in which the property will be held, put down the deposit to open escrow, handle all title and escrow documents, work with the lender to get the best interest rates, secure the loan, and make sure the project is staying on track with time and budget.

Gatsby also handles everything on the investor side. We prepare the investment offering info for investors, keep investors updated throughout the project, provide customer service support, and take property photos. We also manage all accounting services including investor distributions, 1065 tax filings, and Schedule K-1s.

Additionally, Gatsby oversees the building and construction side of the project. Once the property is purchased, we work with the architect to complete the building plans, submit the plans to the city for permit approval, hire and manage the general contractor (GC), supervise the construction team, handle property inspections, construction draws, select the material and finishes, and sign off on the completed construction project.

ROI does not consider any time frame; it only states how much return on investment a project made as a whole. The annualized return shows the ROI over a 12-month period. The annual return is useful when comparing investments because it allows investors to

see how each investment performs over a standard one-year period.

To calculate your ROI (Return on Investment), divide your net profit by the total investment amount for a property. Multiply the result by 100 to see your ROI expressed as a percentage.

The ROI (Return on Investment) for a project is calculated based on the period from the day we open the investment on the website to the date we estimate the project will be completed and sold.

Your ROI is prorated based on the period during which you were an investor in the deal. For example, let’s say you are considering an investment opportunity with a full timeframe of 20 months under the “Deal level financials” and an estimated remaining timeframe of 19 months under the “ROI calculator.” If you were to enter the deal with 19 months remaining, your share in the profit would be prorated for the 19 months during which you were an investor in the deal.

Gatsby’s proprietary software automatically counts down the days and calculates the estimated ROI for you based on the day you are viewing the investment. Importantly, only the actual ROI will vary based on your period of investment, the annualized return will remain the same for all investors in a project.

In the unlikely event that a project was to fall out of purchase escrow, Gatsby would give the investors in the deal the option of either joining a similar project or getting their funds back.

We have two separate policies for our construction/new development projects.

1. Premises liability insurance. This covers an individual getting injured on the property.
2. Builder's risk insurance. This covers the property itself during construction if it was to get damaged or destroyed. This includes fire, vandalism, and other unexpected events. In case something was to happen to the property, the insurance would cover the full “Replacement cost.”

When you have placed an investment with us, you will be able to track the investment through the online dashboard. Under the “My Investments” tab, you will be able to follow the project each step of the way.

We display the project’s progress bar to show the current status of the project, we upload construction photos regularly, and we update the “Property Status Notes” at the beginning of each month to explain what we are currently working on and update any changes to the estimated completion date.

Additionally, we send email updates when the project moves from one status to another. For example, when the property goes from the permit process into construction, you will get an email update.

Gatsby Investment always estimates an initial timeframe from start to finish, with all stages including, architectural design, city permit, construction, property sale, escrow, and disbursement. Because Gatsby focuses on the same type of builds we have prior experience in, we are typically good at estimating accurate timeframes.

But is important to know that timeframes are subject to change. Things can happen that are out of our control. Bad weather conditions can delay construction, materials can take longer than projected to be delivered, and the city can be behind on permits or even request additional permits without warning. General market conditions can also affect the time a property sits on the market for sale. These types of delays can happen with any real estate investment.

If there is a delay in a project, Gatsby Investment keeps investors updated on the expected completion date via the “My Investments” feature on your online dashboard. The dashboard allows you to track the status of your project, including any potential delays. On our end, we work to resolve the issue causing the delay and resume the project as quickly and efficiently as possible.

In the event that a project needed additional funds to complete the development, Gatsby would provide the money to the ownership LLC through a 0% interest loan, which would be repaid once the property sold.

Gatsby carefully analyses market conditions to estimate the sale dates and sale prices of completed properties. However, with ever-changing market conditions, it is possible for a property to take longer to sell than expected or to sell for more or less than expected.

If a project takes a bit longer to sell than expected, we will continue advertising the property and update the investment status accordingly to keep investors up to date on the progression. Assuming the property still sells for the projected amount, the investors’ total ROI would not be impacted.

If unforeseen circumstances were to change the market so dramatically that it no longer makes sense to sell the property, Gatsby would find qualified renters for the property, generating passive rental income for investors, as well as tax breaks through rental property depreciation deductions, until the market stabilizes, and the property can be successfully sold.

Please note: Gatsby has never been unable to sell a property that was intended to be sold upon completion. But we are ready to do what needs to be done to ensure the success of every deal, regardless of how the market may change.

If the property sells for more than expected, the additional profits are shared among the project’s investors. If a property were to sell for less than expected, the ROI would be updated to reflect the lower-than-expected sales price.

All figures are estimated until the project is complete. Gatsby cannot and does not guarantee a minimum ROI. If a property were to sell for less than expected, the ROI for the project would be lower than projected.

Please note that there would be multiple steps taken before deciding to sell a property for much lower than estimated. We could, for example, advertise the property for a bit longer until we find the right buyer at the right price. Or we could fill the property with tenants and stabilize it to attract more buyers and command a higher sales price.

Gatsby is proud to say that the majority of our deals have sold for more than our estimated sales prices. Please take a look at our completed deals to get a better understanding of the ROI investors have earned on our projects to date.

Gatsby strategically purchases and builds properties that are in high demand, so it is very rare to have a unit empty for long. If a renter gives their notice to vacate, we can usually find a replacement tenant to move in within 30 days of the unit being vacated. In that case, you may only receive a partial disbursement from rental income during that period of time.

A market crash would not have much of an impact on our rental properties since our intention is to hold them for the long term. During a recessed housing market, we might need to wait to raise rents or refinance the loan. But we would continue to collect rents as usual while the market dips and then recovers.

For the properties that are renovated or built-to-sell, we may decide to hold the asset as a rental in the event of a housing crash. If we find that it’s a bad time to sell, we can place the property in service and collect rental income until the market recovers.

Go to the tab “Information” and click on “Completed Deals.” Then simply click on any of the properties to view the property address, before and after photos, and a summary of the financials and timeframe of each project.

Gatsby Investment made a name for itself by establishing a strong track record of single-family house flip projects in the early years of our business. We have since shifted focus to multi-family new developments. We still love our house flip model since it allows us to quickly add value to a property, which gives investors a very short-term real estate investment option.

However, general market conditions limit how much value we can add and how large our profit margins can be. When there is low inventory, high interest rates, and high property values, home flips are less profitable for investors.

Gatsby always focuses on projects that make financial sense under current market conditions. If you see fewer house flip opportunities, this is because there are fewer profitable home flip deals to be found and we are focusing on other, more profitable project types.

Coming soon investments offer a sneak peek at deals we will be offering in the future. You can view the property description and estimated financials for projects that will be coming available. You will be notified once these opportunities are open for investment.

Open investments are ready to accept funding today. You can view the property details, financial breakdown, and a full description of our plans for the property. And you can wire your investment to join the project with an ownership stake.

In most cases, we use the bank’s appraisal to determine the property value. In cases where the bank is not the appraiser, we use appraisers who are certified members of the Appraisers Association of America (AAA). AAA-certified members have at least 10 years of experience as licensed real estate appraisers. They have more experience, education, and expertise than other real estate appraisers, making them uniquely qualified to properly value our developments, renovations, and rental properties.

For deal-by-deal projects, we never ask investors for additional capital. Investors can never be liable for more than their initial investment in a property. In the event that a project goes over budget, Gatsby Investment either 1) lends funds to the deal (with zero interest) and gets reimbursed that amount when the project is complete, or 2) gets additional funding from the lender in order to complete construction.

For deal-by-deal investments, Gatsby accepts up to 90 investors in any given deal. For Fund investing, we accept up to 500 investors in any given fund.

Investors cannot exit an investment early. The capital invested is used until the project is complete, at which point funds will be disbursed.

We accept both ACH and wire transfers when sending your investment funds. When you have placed an investment, you will be given the instructions for both methods. From the time you place the investment, you will have five business days to send the funds to activate your investments.

Gatsby Investment clearly outlines the fee structure for each investment project under the “Deal Level Financials” breakdown. Gatsby typically charges a development fee and a service fee on each deal. Please click on each specific investment opportunity to see the percentage split.

Gatsby Investment collects a fee for managing all stages of the real estate process. The percentage of the fees can vary for each property type and LLC. The services include location scouting, opening and managing the LLC, buying and selling the property, securing the loan, handling escrow, applying for permits, managing the construction team, interior and architectural design, stabilizing the property, overseeing the management company for rental properties, accounting services, investor distributions, etc.

Based on restrictions from the SEC (Securities and Exchange Commission) rule 506c, only accredited investors can invest with Gatsby Investment.

To invest as a non-US citizen, you need to open a US entity (Gatsby can only accept C corporations), have a tax identification number (TIN), and have an American bank account.

You will need to work with a US-licensed attorney or CPA to set up your C corporation. Please note that this is not a service Gatsby provides. However, many of our international clients have worked with Prime Corporate Services to open the C corporations and receive their TINs.

Certain types of retirement accounts can invest with Gatsby. Currently, you can invest with any of the following account types: Self-Directed Solo 401(k), IRA LLC Single-Member, and IRA LLC Multi-Member.

Some retirement account types require that the investment property generates passive income for at least one year, or that a custodian manage the account. Therefore, we can only accept Self-Directed Solo 401(k), IRA LLC Single-Member, and IRA LLC Multi-Member at Gatsby. All retirement accounts must be self-directed by the investor.

Gatsby Investment does not offer services to convert one type of retirement account to another. However, we are happy to refer investors to IRA Financial Group for this service. The direct contact is Account Executive, Casper Dabek. Here is his information:

Casper Dabek, Account Executive | cdabek@irafinancial.com | www.irafinancial.com | schedule an appointment

Not exactly. While you can reinvest your earning into a new project, you must first receive the proceeds from your previous investment; we can’t hold your funds from one project and invest them directly into another project on your behalf. Once a project is complete, we will disburse the funds back to your bank account automatically. After you receive the funds, you can then choose to reinvest in a new property.

For legal purposes, investors cannot name “beneficiaries” on the Gatsby platform. If anything were to happen to you, your share in the property would be passed along to the person named in your will, trust, or similar legal document.

You can, however, name an emergency contact in the platform. This field becomes available on your profile after you have placed an investment. And this is the party that Gatsby would contact to arrange disbursements on your account.