Real Estate Investing News and Advice!

Welcome to your source for real estate investing news, insights, and guidance.

As industry experts, we stay up-to-date with real estate market trends, and actively work to stay ahead of changing market conditions. We’re excited to share our research and analysis with you! With these market insights, and real estate investing tips, you’ll have a competitive advantage over other investors in your local market.

The topics we cover include real estate news, interesting market trends, buying and selling real estate, and managing rental properties. We also share company news from Gatsby Investment, so you’ll have the inside track as Gatsby continues to expand operations.

Want to learn even more? Click the links to view educational articles, press releases, and explainer videos.

Gatsby’s Investment Strategy for 2025

With interest rates projected to decline throughout 2025, we expect to see the housing market pick up a bit this year.

The rate declines are good for buyers and investors looking to increase purchase power, while also incentivizing property owners to sell (knowing that they won’t take such a big hit from trading a low-interest mortgage for one with a much higher rate).

So what is Gatsby’s plan to capitalize on lower rates and provide strong return potential for investors? Here’s a sneak peek at Gatsby’s investment strategy for 2025.

Increase Housing Inventory

The Southern California housing shortage continues to be problematic for locals and for those who want to relocate to the area. As of May 2024, experts estimated that Los Angeles County alone needed nearly 500,000 units to accommodate the population, with specific emphasis on attainable housing for low-income households.

Of course this was before this month’s wildfires, which devastated families and communities across the area and destroyed more than 1,400 residential structures, resulting in a greater strain on current housing inventory.

While a lack of inventory tends to drive property values up, Angelinos don’t want to see home prices artificially inflated by purposely withholding inventory. Rather than creating a real estate bubble that could burst, we’re looking to build sustainable growth that balances housing attainability with strong returns.

That’s why Gatsby is committed to developing new housing units.

Multi-Family Developments

Multi-family developments are in high demand by renters who have been priced out of the housing market or prefer the simplicity and flexibility of renting over owning. These buildings are also in high demand by investors willing to pay top dollar for new-construction apartments already stabilized with new tenants.

Having completed dozens of developments in Los Angeles, Gatsby has the systems and teams in place to build these structures quickly and efficiently. The comparatively short build periods help us bring new units to the community while providing fast returns for investors.

Built-for-You

Our new built-for-you product provides a unique opportunity for investors to venture into multi-family real estate development without the time, hassle, and risk of traditional private development.

With our built-for-you program, we manage the acquisition and construction of your new development while you retain full ownership rights. When construction is complete and the building is fully occupied by new tenants, you can take over the day-to-day management of the stabilized property. Or we can match you with a well-regarded property management team to provide this service for you.

You get the benefits of a brand-new rental property without the high price tag of buying a new construction turn-key apartment building. No experience, specialty knowledge, or industry connections needed on your end! We take care of everything.

Together, we can bring new units to the market with this innovative investment structure.

Develop Affordable and Attainable Housing Solutions

There is a particularly high need for affordable and attainable housing in Los Angeles. Affordable housing means the monthly housing payment (including principal, interest, insurance, taxes, and utilities) equals no more than 30% of the gross household income. Attainable housing is defined as a residence that is affordable enough to be purchased by individuals and households earning between 70% and 100% of the local median household income (as established by the U.S. Census Bureau).

There are multiple ways to meet this growing need while maintaining strong yield potential for investors.

Section 8 Housing

Section 8 is a government-sponsored affordable housing program, designed to help low-income renters cover their housing costs. This program provides much-needed benefits for veterans, senior citizens, struggling families, and the differently-abled.

Because of the arduous application process for recipients of Section 8 vouchers, these tenants are often reliable and tend to remain in the unit for the long term, reducing turnover and minimizing vacancy losses for investors.

Tenancy in Common

Tenancy in common (TIC) is a type of real estate ownership where multiple individuals hold legal rights to the same property. Each co-owner possesses an "undivided" interest, meaning they share ownership of the entire property rather than specific sections, with their ownership percentage representing their proportional stake in the property.

TIC ownership is more affordable than single-family or condo ownership, providing a new path for homebuyers looking for attainable housing solutions.

And with our experience building multi-family structures, Gatsby already has the workforce and systems needed to develop TIC projects!

How to Invest with Gatsby in 2025

Gatsby’s investment opportunities are open to all accredited investors. You can explore our available real estate offerings and choose the project(s) that best align with your timeline and investment goals.

If you have any questions, our dedicated service reps are happy to assist you. Schedule a call with a Gatsby representative today!

Introducing Built-for-You Developments

Have you ever wanted to be a real estate developer? But maybe you don’t have the time or experience to develop a new property from start to finish on your own…

Gatsby Investment’s new built-for-you development offering gives you the satisfaction and financial benefit of being a real estate developer without the hassle of being a developer!

What is a Built-for-You Development?

Gatsby’s built-for-you projects are developments that you own and control while Gatsby does all the work on your behalf.

We manage the entire acquisition and construction process for you while you retain full ownership. When the development is completed, tenants are moved in, and the property is stabilized, we step back, turning the completed, fully occupied property over to you.

This unique opportunity allows real estate investors to enjoy the benefits of brand-new rental developments without the high price of purchasing a newly built stabilized property. You don’t need to invest any time or energy in the development. Nor do you need any prior experience, skill, specialty knowledge, or industry connections. We bring all of that to the project for you!

How Does Built-for-You Work?

Gatsby handles every detail of the project, giving you a fully passive investment experience throughout the development and stabilization of the property.

Here’s how we handle the heavy lifting:

Strategic property acquisition. We identify prime multi-family development sites, whether raw land or underutilized lots with teardown potential.

Comprehensive due diligence. Our team analyzes market data, including sales and rental comps, to ensure strong investment potential.

Seamless ownership setup. We establish the LLC, draft legal agreements, and manage all necessary documentation.

Expert design and permitting. From architectural plans to securing permits, we ensure compliance with local building codes and regulations.

Efficient construction financing. We assist with securing a construction loan by preparing all necessary financial documents.

Project oversight from start to finish. Our team manages the construction process, ensuring quality, efficiency, and cost control.

Financial management. We handle fund control, construction draws, and project accounting to keep everything running smoothly.

Property stabilization. Once built, we market the property, screen tenants, and lease-up units to ensure full occupancy.

Long-term financing support. When the project is complete, we help you secure a mortgage for long-term ownership.

The entire process typically takes only 18-24 months, depending on the scale of the project.

What are the Benefits of Built-for-You?

With Gatsby’s built-for-you model, you get all the benefits of developing and owning a high-performing multi-family rental property, including:

A lower purchase price. Leverage our network of real estate insiders to find off-market deals, which can typically be bought at a discount.

Maximized property value. Ground-up construction allows you to add value at every stage, from land acquisition to completion.

Superior ROI potential. Developing a property yields higher returns than purchasing turn-key, and our expertise and industry connections help you secure discounted rates on labor, materials, and real estate fees to optimize your returns.

Favorable loan terms. Our relationships with local lenders can earn you lower interest rates.

Exclusive ownership. You retain 100% control over your asset, without splitting equity or decision-making with other investors.

A favorable property tax basis. Newly developed property’s taxes are based on the purchase price plus construction costs. This results in lower annual property taxes than purchasing an existing property at a higher cost.

Expert oversight from start to finish. Our team navigates every challenge, ensuring a smooth and successful development process.

Completely hands-off investment. We oversee every step of the development process, so you can focus on other priorities while your property is being built.

Who Can Invest in Built-for-You?

Our built-for-you developments are exclusively available to individuals and corporations that meet specific financial and legal criteria. To participate, you must:

Be an accredited investor. In accordance with SEC regulations, investors must meet specific net worth or income thresholds to qualify as accredited investors before partnering with Gatsby in a built-for-you development.

Provide proof of funds. You’ll need to demonstrate sufficient capital to cover the full investment amount, ensuring the project is fully funded.

Qualify for long-term financing. After construction is complete, you must secure a mortgage to finalize ownership and transition into long-term holding.

How to Invest in a Built-for-You Project

We believe in full transparency and simplicity when it comes to investing. Every essential detail is readily available on our website, giving you the confidence to make informed decisions.

Before committing, you’ll have access to comprehensive project insights, including:

Property details: Address, building plans, and unit specifications
Timeline: A complete development schedule
Financial breakdown: Estimated costs, projected returns, and market comparables

Once you’ve completed the qualification process and selected a project, placing your investment is simple. Our website guides you step by step, ensuring a seamless and hassle-free experience.

Have any questions about built-for-you developments? Schedule a call with a Gatsby representative today to discuss your investment goals and how we can help you achieve them!

How Gatsby is Managing Investments and Supporting the Community During the LA Wildfires

As the wildfires continue to devastate Los Angeles County, we at Gatsby want to address the questions we’ve received regarding the status of our active investment projects as well as future projects in Los Angeles.

We understand this is a time of uncertainty, and we want to provide as much information and clarity as possible.

To that end, here are the answers to some of your most pressing questions about how Gatsby is managing investments and supporting the community during the LA wildfires.

1. Are any of Gatsby’s projects impacted by the fires?

None of Gatsby’s properties have been impacted by the current wildfires, and at this time, none are in high-risk zones. Our team will continue to monitor the situation and keep you informed of any developments.

2. How will the current wildfires affect Gatsby’s projects?

The fires have reduced housing inventory in a market already facing a serious housing shortage. Fortunately, Gatsby has spent the last few years adding large multi-family units to the housing market, putting us in a strong position to help meet the urgent demand for family-friendly housing. We have already received numerous inquiries from individuals and families actively seeking housing, and we are helping to match them to suitable accommodations.

3. Is the availability of construction materials affected?

At this time, we do not expect the current wildfires to impact the availability of construction materials for our active projects. However, the recovery from this devastation will likely take years to complete as those affected go through a multi-stage rebuilding process. The first priority, of course, is to contain the current fires. Then locals can begin clearing and cleaning, rebuilding infrastructure, and preparing for reconstruction.

So, while we do not anticipate immediate supply chain disruptions, we will continue to monitor evolving conditions during the recovery and be prepared to address any potential challenges as they arise.

4. How are Gatsby’s properties protected against fire?

All of our properties are covered by robust insurance policies, including:

Builder's Risk Insurance. We carry builder's risk insurance with fire coverage up to the total cost of construction on all developments. This policy would reimburse us for costs based on the construction progress at the time of the loss, ensuring our expenses would be covered.

Landlord Policies for Built and Rented Properties. Completed and rented properties are protected by landlord insurance. This includes replacement cost coverage to restore the property to its original condition and covers loss of rental income during the rebuilding process.

5. What happens if a fire impacts a property?

In the unfortunate event of a fire affecting a property, our insurance policies are designed to minimize any financial impacts. In this case, we would reevaluate the project following the fire to determine the most fiscally responsible path forward, keeping investors in the loop at every stage.

6. How is Gatsby supporting the community during the wildfires?

Gatsby has a long-standing commitment to developing more LA-area dwelling units to help alleviate the pressure of the housing shortage. Since 2016, we have added over 100 units to the local housing supply by building ADUs (additional dwelling units) during single-family flips and converting single-family lots into multi-family buildings with 4-10 units each. As residents displaced by the fires look for temporary housing, we are proud to support them in finding comfortable, well-designed accommodations from which to rebuild their lives.

7. What will the long-term impact of the fires be on the LA housing market?

The devastating wildfires in Los Angeles have not only caused immense personal loss but have also further strained an already tight housing market. With lower inventory levels, the destruction of homes will likely increase local demand.

While this dynamic may contribute to rising property values, our focus remains on sustainable, long-term growth that balances strong investor returns with the need for attainable housing. A resilient market benefits from a thoughtful investment strategy that supports rebuilding efforts, strengthens communities, and ensures that Los Angeles remains a place where people can live, work, and thrive.

Gatsby’s Year in Review: Strategies and Results for 2024

As we close out 2024, this is the perfect time to reflect on the year in real estate - a year filled with challenges, opportunities, and significant milestones for Gatsby and our investors.

We want to let you in behind the scenes by sharing our 2024 review with you!

Here is a transparent look at the difficulties we faced, the strategies we employed, and the results we achieved. We’ll also share how we’re positioning ourselves for an even more successful 2025.

2024: A Shifting Market with New Challenges

Real estate is never static or boring! The market is always shifting and creating new challenges and opportunities. Rising interest rates earlier in 2024 slowed the pace of transactions, resulting in fewer deals and longer sales timelines.

Furthermore, regulatory and procedural changes slowed down development timelines:

Permit Delays: Increased bureaucratic inefficiencies are causing projects that once took three months to approve to take closer to six months in 2024.

All-Electric Building Mandates: While we are in favor of sustainable building practices, new AMP and Green Building Code requirements added complexity to developments in 2024. These regulations, which push for all-electric buildings, increased costs, reduced design flexibility, and delayed completion timelines. For example, upgrading electrical systems from 400 amps to 600 amps for smaller projects (6 units or fewer) became a time-intensive process requiring lots of back-and-forth with the Department of Water and Power (DWP).

Election Uncertainty: The presidential election temporarily stalled the market, as buyers and sellers hesitated to make decisions without clarity on the upcoming political and economic landscape.

This slower market made our once lucrative house-flipping projects less attractive. Luckily, our ability to adapt to market dynamics ensured that we stayed ahead of the curve. We focused on what we do best: multi-family developments (built-to-sell)! And we quickly pivoted from house flips to Tenancy-in-Common (TIC) projects which create attainable housing solutions for moderate-income households.

Turning Challenges into Opportunities

We answered 2024’s challenges by leveraging solid opportunities where they could be found. Thanks to our deep industry connections and established relationships with real estate agents and brokers, we were able to locate rare high-quality deals. In this landscape where the best lots generate fierce competition from multiple buyers, Gatsby often secured deals before these lots were even listed on the market!

This competitive edge comes from years of trust-building and a reputation as a reliable, results-driven developer in the Los Angeles market.

2024 Performance Results

Gatsby once again delivered strong results for our investors despite the slow 2024 market conditions! We are proud to close 2024 with an average annualized return of 15.30% bringing our company-wide average return from 2016 to 2024 to 22.04%.

Gatsby’s Competitive Advantage

Our 2024 performance is a testament to our data-driven approach and unwavering commitment to maximizing value, even in a complex market. We attribute much of our success to these enduring strengths:

Industry connections. Our network of agents, brokers, and bankers gives us access to deals that others can’t match.

Specialized expertise. Gatsby’s team is uniquely equipped to navigate the complexities of the LA market, ensuring lower risk and higher returns.

A resilient market. Los Angeles real estate has its ups and downs, but its long-term strength and value remain unmatched.

Looking Ahead: Gatsby’s Focus in 2025

The year ahead promises exciting developments as we continue to evolve and expand our offerings. Here’s what we’re focused on for 2025:

Multi-Family Developments (Build-to-Sell). We remain committed to this flagship product line, which has consistently delivered strong returns and aligns with Gatsby’s expertise. It is our privilege to develop high-quality buildings that help ease the housing shortage in Los Angeles.
TIC Projects. While these opportunities are more limited due to specific property requirements, we will continue to pursue select TIC projects that meet our high standards.
New Product Line: Multi-Family Build-to-Rent. This highly requested model allows investors to participate in both the equity-building phase of development and the long-term rental-holding phase. Benefits include lower tax rates, passive income, and long-term property appreciation, making this an ideal option for investors seeking to grow their portfolios over time.
Exclusive Offering: Built-for-You Developments. For investors seeking 100% ownership, this model provides full control of a multi-family property after the property is built. Gatsby manages the entire ground-up development process, ensuring the experience is completely passive for you. This opportunity is best suited for vetted real estate investors with an established rental portfolio, offering a seamless way to expand your holdings.

Leverage Gatsby’s Strategies for Your Portfolio in 2025!

As we look ahead to 2025, we encourage you to consider diversifying your portfolio with real estate syndication. By investing with Gatsby Investment, you get to leverage the knowledge and strategies of an experienced real estate investment company with a solid track record of strong returns. Plus, Gatsby’s innovative investment models, ranging from multi-family developments to TICs and custom ownership opportunities, offer something for every investor.

Let’s make 2025 the year you explore new opportunities in real estate!

Have questions? Schedule a call with a Gatsby representative today to discuss your investment goals and how we can help you achieve them.

The Benefits of Being a Buyer’s Agent

The 2024 NAR settlement has caused some real estate agents to question whether or not it’s worth working with buyers.

Negotiating your own fees upfront and getting a signed representation agreement before showing properties adds hurdles to the buyer’s agent role.

But before refusing to accept new buyer clients, consider some of the benefits of being a buyer’s agent! Here are the top five…

1. Repeat Business Potential

Yes, any agent can generate repeat business from clients buying and selling multiple properties. But a first-time buyer’s agent gets in on the ground floor.

When you represent a first-time buyer, you build trust, perhaps as the only industry expert the buyer knows. Maintain that relationship, and they’ll be highly likely to choose you as their listing agent when they’re ready to sell their starter home plus their buyer’s agent as they search for their step-up home. You might even represent them in investment property purchases, or help their children buy their first homes!

Plus, as the trusted agent for the buyers, you’re the only agent they will recommend when friends and family are looking for a referral to a strong buyer’s agent.

2. Easier Point of Entry into the Industry

Most agents start their real estate careers working with buyers.

Sellers are more likely to either choose the agent who helped them purchase the house or interview multiple candidates to see who they think can find them the most qualified buyers and negotiate the best deal. Buyers are less likely to interview multiple agents, giving new agents a greater chance of securing their business.

Working with buyers also provides great exposure to the market for new agents. Unlike listing agents, who focus on their sellers’ properties, you get to experience multiple properties for every buyer client you have. This builds your knowledge base about your local market, helping you understand what buyers look for, how much they’re willing to pay, and what kind of concessions they expect.

3. Lower Marketing Costs

There are always marketing costs associated with being a real estate agent. You have to market yourself strategically so buyers and sellers can find you.

As a buyer’s agent, you can market yourself inexpensively with a website, social media channels, and digital newsletters to your email list.

But sellers have to market themselves and their listings. Seller’s agents pay for signage, listing advertisements, photography, videography, 3D imaging, brochures, flyers, and open house refreshments. Of course, the expectation is that the commission on the sale will compensate for all of that, but paying these expenses before you earn a commission can cause cash-flow issues.

4. Less Competition as Fair-Weather Buyer’s Agents Shift or Exit

Many established buyer’s agents are unwilling to adapt to the post-NAR settlement industry. They don’t want to have to negotiate their own compensation or be required to secure a signature on a representation agreement before showing property. So they’re shifting focus to listings. Or leaving the industry entirely.

This is great news for the agents who are willing to adapt to the new standards. You’ll have less competition from other buyer’s agents, increasing your chances of landing new business.

5. Greater Job Satisfaction

Sure, helping a homeowner sell their house so they can move on to their next chapter is fulfilling work. But it can also be a little sad. People often sell because of divorce, death, or inability to remain in the home.

Helping buyers, on the other hand, is nearly always a happy occasion - especially when you’re able to help first-timers become homeowners. You know you’re helping people find the houses that they’ll make into homes. And, in most cases, you’re setting them on the path to financial stability by helping them secure an asset with appreciation potential.

Bring Your Buyers to Gatsby Investment - Or Help Us Find Our Next Deal!

Gatsby Investment is a real estate investment company that regularly purchases, renovates, and sells properties in the Los Angeles area. We’re always looking to partner with real estate agents and brokers for mutually beneficial deals.

If you know of any property that meets our criteria for acquisition, please submit the property for consideration. Similarly, if you have any buyers, particularly investors looking for small multi-family structures, please explore our properties for sale. You can even view pre-market properties, so you can give your buyers an early look at properties under construction.

Buyer’s agents play a critical role in the real estate industry, and no NAR settlement is going to change that! The settlement may have created a few additional challenges, but with so many benefits of being a buyer’s agent, it’s worth the extra effort!

Navigating the Market Shift: The Path to Normalcy After Interest Rates Drop to 5.5%

With some real estate experts predicting mortgage interest rates of 5.5% or lower in 2025, we wanted to look ahead to how the market will likely react to such a drop.

Rates at this level would likely usher in the new normal. Long gone are the days of 3% mortgage rates. But with inflation slowing, we no longer need the 7.5%+ rates we saw in 2023.

So how do we navigate this shift to the new normal? Here’s what we expect to see as mortgage rates decline toward 5.5%.

1. A Surge in Refinancing

Property owners who got locked into higher rates by purchasing in late 2022 through early 2024 are just waiting for rates to drop so they can refinance to a lower rate. This wave of refinancing could give the entire economy a boost by reducing mortgage payments and giving owners more disposable income to spend elsewhere.

Prepayment Penalties, Closing Costs, and Refinancing Decisions

Of course, refinancing only makes sense when the interest savings more than offset the costs associated with originating the new loan, plus any prepayment penalties on the existing loan.

To calculate the breakeven point of a refinance, divide the total refinancing cost (including any prepayment penalty) by the monthly mortgage payment savings. This will tell you how many months it will take for the savings to exceed the expense. You’ll need to hold the property under the new mortgage for at least that long to benefit from a refi.

2. Alignment of Rent and Interest Rates

With rates falling, landlords and investors may need to adjust rental prices to reflect the lower borrowing costs.

In many cases, when interest rates fall, homeownership becomes more accessible, so more people buy and fewer people rent. However, in high-value markets like Los Angeles, so little of the population can afford to buy that renter demand continues to be high.

The alignment process should be considered before acquiring or selling properties. If rents decrease to reflect lower interest rates, it might make sense to hold the property for a lease cycle or two until rental agreements can be signed with higher rental rates to encourage buyers to pay more for the investment property.

3. The Golden Handcuffs Come Off

Many property owners who purchased their assets between 2012 and early 2022 have the fortunate problem of being locked into sub-5% interest rates. Someone who locked in a 3% rate in 2020 (through a new purchase or refinance) hasn’t wanted to sell their primary residence despite strong appreciation and corresponding equity increases in most markets. These owners know that selling means giving up that rate and accepting a much higher rate on the purchase of a replacement property.

Economists call this problem golden handcuffs, alluding to the fact that owners are trapped by something of value.

But as rates drop, the financial impact of giving up an old mortgage to take on a new one isn’t as severe. This means more owners may be willing to sell, which is good news for buyers who have been struggling with low inventory for years.

Navigate the Shifting Market with Gatsby Investment

Real estate markets are always changing, but they rarely do so instantaneously. It could take 6-12 months for the full effects of this new normal to be felt. During this transition period, we will see gradual changes in refinancing, rental prices, and new listings.

Gatsby Investment diligently monitors the market to stay ahead of changing conditions for our investors. Whether rates are rising, falling, or stabilizing, we are continually tweaking our strategy to take advantage of the current economic climate.

Leverage our market expertise for your real estate portfolio. Explore our available investment opportunities and let us take care of the details for you!

How Did Los Angeles’ Mansion Tax Affect Gatsby Investment?

Since April 1, 2023, the so-called mansion tax has been applied to every non-exempt real estate sale of $5 million or more in Los Angeles.

This initiative has raised around $439 million for city housing projects (as of October 31, 2024), but it has dramatically affected the local real estate market.

If you’re a Gatsby Investor (or you’re thinking about investing with us here at Gatsby), you may be wondering how LA’s mansion tax affected Gatsby. This post will explain how the mansion tax has affected our market, and what Gatsby is doing to help our investors make the most of today’s mansion-tax market.

What is the Mansion Tax?

The mansion tax, officially called Measure ULA, is an extra transfer tax on high-value real estate in the city of Los Angeles. This tax is charged to the sellers. However, sellers might increase the sales price in an effort to share the cost burden with the buyer.

When the voter-approved measure was launched on April 1, 2023, it applied to properties with a $5 million+ sales price, but this threshold is adjusted every year based on the Consumer Price Index.

Beginning June 30, 2024, the mansion tax is levied as follows:

Properties with a sales price below $5,150,000 = no additional tax
Properties with a sales price between $5,150,000 and $10,299,999 = 4% additional tax
Properties with a sales price of $10,300,000 or more = 5.5% additional tax

The while mansion-tax moniker makes it sound like this only applies to residential estates, it actually applies to all types of real estate: residential, commercial, industrial, and even vacant land.

Mansion Tax Exemptions

A property is exempt from the mansion tax if the transferee (buyer) is a qualified affordable housing organization, a qualified 501(c)(3) entity, or a government entity or agency.

Note: Even if the seller is a qualified affordable housing organization, it is not exempt from the tax if the buyer is not an exempt entity.

How is the Mansion Tax Affecting the Los Angeles Real Estate Market?

The long-term effects on property values and market dynamics are still unfolding, but so far, we’ve seen:

A rush of sales over $5 million just before the tax was implemented in Q1, 2023.
A slow-down in sales over $5 million since then, as the tax discourages property owners from selling.

Proponents of the measure claimed it would generate between $600 million and $1.1 billion per year to help the city fund housing initiatives. But so far, the actual income has been 27-60% short of expectations.

How Did the Mansion Tax Affect Gatsby Investment?

Prior to 2023, Gatsby had had success with luxury home developments. We would build one-of-a-kind estates in the most prestigious neighborhoods in LA, and sell to high-net-worth individuals with discriminating tastes.

The mansion tax dramatically slashed profit margins on this type of investment. Because we stay current on changing market conditions and real estate regulations, we were able to pivot out of luxury homes before the tax took effect.

Our goal is always to maximize the return potential for our investors. So we shifted to projects that offer better returns: single-family house flips and small multi-family developments.

Single-Family House Flips

Single-family house flips offer short terms, low minimum investment amounts, and impressive value-add potential. We focus on lots that are large enough to accommodate an ADU (accessory dwelling unit), which allows us to create two living units on a single-family lot.

Newly-renovated homes with ADUs are in extremely high demand because they are turn-key for the new buyer, and offer a separate residence to be used as a guest house, multi-generational living space, or even an income-generating rental property.

We specifically select mid-range properties that will sell below the mansion tax threshold, saving our investors from this profit-reducing tax.

Small Multi-Family Developments

Multi-family developments are in high demand and offer potential for above-average yields. We focus on lots that are large enough and zoned correctly to accommodate a 4-10-unit structure. These smaller multi-family buildings are easier to get permitted, faster to build, and in greater demand by investor-buyers.

These developments are built to sell and can be completed in as little as 18-24 months. By keeping the number of units low, we can keep the sales price below the mansion tax threshold to avoid the extra tax.

Invest with Gatsby Today!

Do you want to join the thousands of investors who have trusted Gatsby with their investment capital? Or maybe you’re ready to invest in your 2nd, 3rd, or 10th deal with Gatsby! Explore our available investment opportunities and leverage Gatsby’s local market expertise to grow your real estate portfolio!

Real Estate Investment Update: Why NOW is the Time to Invest in a Gatsby Deal

With the election behind us, some economic uncertainty has lifted, and we can now forecast more accurately for the remainder of 2024, going into 2025.

The real estate investment experts here at Gatsby have been analyzing changing market conditions in real time, and we have some insights on what you can expect in the year ahead. We also have some tips on how to strategically position your investment portfolio.

Take Advantage of Interest Rate Cuts and Positive Momentum

One of the most significant developments for real estate investors has been the recent interest rate cuts. Lower interest rates reduce borrowing costs and increase cash flow potential. This has a ripple effect throughout the market, leading to more buyers and prompting more sellers to make a move!

With inflation remaining a concern (despite its substantial slowing), there’s a strong possibility that rates may continue to decline, which would further support both our current and future investments.

Leverage Conservatively Structured Deals, Positioned for Success

At Gatsby, we are dedicated to providing attractive, sustainable returns to our investors. The projects we currently offer are conservatively underwritten, with timelines and return structures designed to withstand market shifts.

Since lower interest rates typically drive higher purchase prices, finding well-priced deals that make strong financial sense can be challenging. That’s why we’re especially proud of our current projects! They were acquired at favorable prices, and if rates continue to drop, these investments are well-positioned to exceed our projections upon completion.

Our conservative approach, combined with acquisitions made at favorable prices, allows our current projects to offer both stability and impressive return potential.

This is the Perfect Time to Diversify Your Portfolio

If you’ve been considering moving some of your investment capital into real estate, there may be no better time to act!

Stock markets are traditionally more volatile than real estate, which can expose stock-heavy portfolios to unnecessary risk.

Real estate remains a powerful tool for portfolio diversification, and Gatsby offers an ideal entry point for investors of all experience levels. Through our syndication model, funds are pooled from multiple investors. This allows you to start with a lower minimum investment while gaining access to exclusive development and value-add deals that would typically be out of reach for individual investors. You get to leverage funds from other investors and expertise from Gatsby to boost your returns! And since Gatsby handles every detail of the project for you, you get to skip the pitfalls and hassle of traditional real estate investments.

Plus, our platform provides complete transparency. You gain an equity share in each deal you choose, and you can track every step of your investment’s journey right from your account, no matter where you are.

Explore Opportunities with Us

There’s no better time to put your money to work. Learn more about Gatsby and how our real estate syndication platform can help you achieve your financial goals. Then explore our available investment projects and choose the project(s) that best suit your objectives.

Don’t wait - this is the time to take the next step toward building a more diversified, lucrative portfolio with shorter-term real estate investments!

How to Negotiate Your Fees as a Buyer’s Agent Post-NAR Settlement

The 2024 NAR settlement completely upended the way buyer’s agents are paid. For nearly a century, buyer’s agents were paid a percentage of the listing agent’s commission (typically 50%). Buyers didn’t have to pay their own agent out of pocket because, as we all know, buyers already have a major financial hurdle to overcome between the down payment, closing costs, moving expenses, and possible renovation costs.

Post-settlement, buyer’s agents aren’t given a share of the listing agent’s commission. Instead, you have to negotiate your fees with your buyers. And this post will give you some tips on how to negotiate effectively.

How to Negotiate Your Buyer’s Agent Compensation

1. Understand the Settlement Terms

Technically, the NAR settlement terms only apply to the REALTORS represented in the settlement. But, in practice, all licensed agents and brokers will feel the impact because local MLSs have changed their systems to accommodate the changes.

So you need to understand the terms of the settlement to make sure you’re operating ethically and legally.

The basics:

Sellers can’t pay the buyer’s agent directly or through their listing agent, but they can give the buyers a concession, which can be used to cover their agent’s fees.

Listing agents can’t publish a buyer’s agent commission split on the MLS, but they can promote the seller’s willingness to offer a concession on other sources, like their websites.

Buyer’s agents must negotiate a specific fee amount with their buyers (like a flat fee or a percentage of the purchase price). This must be documented in the Representation Agreement and signed by both parties before showings can begin. The buyer’s agent cannot earn more than this amount from this buyer, even if the seller is willing to offer a higher concession.

2. Demonstrate Value

Since you have to negotiate your fee with buyers, you have to show them what you bring to the table and why you’re worth the big bucks! Here’s how:

Highlight your differentiator. Clearly articulate what makes you a better choice than every other agent in the market. This might include your experience, local market knowledge, negotiation skills, or services.

Share success stories. Have your previous clients write or record a testimonial explaining how you helped them save money, get an offer accepted, or navigate a complex deal.

Find unique properties - before they hit the market. With Gatsby Investment, real estate agents can view active and pre-market listings. Our projects are either recently renovated or newly constructed and move-in ready. Even better, we have small multi-family developments available for your investor clients! Our 4-6 unit multi-family buildings are ideal for your investors who want to grow their portfolios without adding more units than they can financially or operationally support.

Provide real value before representing your clients. Stand out by giving value to future clients long before you sign them. You can send housing market reports to locals, host free first-time buyer seminars for renters, or provide complimentary property tax reviews for homeowners (which also gives you a chance to create a separate stream of income through property tax appeals!).

3. Offer Flexible Commission Structures

We’re all in favor of charging what you’re worth. If you’re an experienced agent worth 2.5%-3% of the purchase price, command that rate!

But this compensation structure change gives newer agents a unique opportunity to compete on price. Consider offering flat fees or variable rates (like a tiered commission structure based on the sale price or the level of service provided). You could even offer payment plans if you wanted!

Offering lower fees than your competitors means leaving money on the table for your first few deals. But it also gives you a chance to get those critical first deals under your belt.

4. Be Transparent

Provide a clear breakdown of your fees and what they cover. Educate your buyers on how you will be working to justify the fee. Set reasonable expectations upfront. Then exceed them.

Be honest about the seller’s potential role in covering your fees. Let your buyers know that they can request a concession to cover your fees when they write an offer to purchase a house. But also let them know that the seller does not have to grant the request. And, of course, sellers may prefer offers without a concession request. Perhaps your seller should offer a higher price in exchange for the concession. After all, that extra amount spread over a 30-year mortgage may be nominal.

5. Script Your Buyer Presentation and Rehearse

You’re probably familiar with scripting. You likely have a listing presentation script as well as scripted responses to common buyer and seller objections. Negotiating your commission requires the same forethought.

Prepare and rehearse your buyer’s presentation until it feels natural and spontaneous. As you do so, keep the following in mind:

Use data to support your compensation. Gather MLS data on the percentage of buyers who use an agent and (if possible) their outcomes compared to those without representation.

Get ahead of common objections. Be prepared to address questions like Why do I have to pay for your services when I can find a home myself? and Will you take a lower fee? Work those into your presentation to show that you understand the buyer’s POV.

Practice insightful questioning and active listening. If a buyer balks at your fees, listen for their real concern. Are they really afraid you’re not worth the rate? Or are they just concerned that they don’t have the money to pay you?

Gain a Repeat Buyer Client with Gatsby Investment

Gatsby Investment is always interested in partnering with Los Angeles-based real estate agents and brokers to find our next property.

We’re currently looking for vacant lots, distressed homes, and distressed multi-family buildings. Please review our specific criteria and submit potential properties for our consideration.

We’d love to be your next buyer client. And, because we regularly buy and sell properties, we could provide you with repeat business if you find us the right deals!

How Gatsby Selects Properties for Syndication

Gatsby Investment is highly selective about the properties we choose as syndication investment opportunities for our investors. We may review several dozen properties to find a single property with strong enough potential to become a Gatsby Property.

Are you wondering how we choose one property over dozens of others? Here’s a behind-the-scenes look at how Gatsby selects properties for syndication.

Step 1: Market Analysis

While we don’t try to time the market, we do leverage market conditions to make the most of our investments. So before we start looking at properties, we conduct a thorough market analysis, looking at factors like:

Economic indicators. Employment growth, interest rates, and consumer spending can all provide clues as to how much people will be willing to spend on housing and investment properties.

Local demographics. We look at population growth, household sizes and types, and age distributions to determine how wide the potential renter/buyer pool will be.

Market trends. Identifying trends in vacancy rates, rental rates, and property appreciation rates helps us understand demand for different property types.

Risk and return: We consider the risk and return profiles of different property types given current (and forecasted) market conditions. For example, house flips can be completed quickly and sold easily, but multi-family developments may offer better returns despite the longer hold period.

Step 2: Review of Property Features

Once we have selected a neighborhood based on our market analysis, we can narrow our search to specific properties that meet our criteria. Here are some examples of what we’re looking for:

Accessibility. Our properties need to have proper infrastructure and easy accessibility to public transportation or main thoroughfares so it’s easy for residents to get wherever they need to go from the property.
Zoning. We commonly convert single-family lots into multi-family housing to maximize returns and help ease the housing crisis. We need to make sure the zoning allows us to build what we want.
Lot size, shape, and grading. We often look for lots that are large enough to either add an ADU (accessory dwelling unit) to the primary structure or to build a multi-family structure from the ground up. We need to confirm that the size, shape, and grading can accommodate our proposed buildings.
Building restrictions. We need to know if there are limits to the properly zoned structure we can build on the property. For example, we may need to make sure the property sits a certain distance from the road or neighboring structures.

Step 3: Transformation Potential

To have transformational potential, we need to know we can get a good deal on a quality property that we can convert into a property that will rent or sell well.

For flips, we’re looking for a structure with “good bones” that we can quickly and efficiently add value to. For new developments, we need to consider the logistics of constructing a building in that location, given the constraints of everything from the lot’s current condition to street access for our construction crew.

In either case, we also need to consider which permits will be required and how long they will likely take to obtain.

We often choose properties that can be purchased for under $1 million, knowing that this leaves the potential for high profit margins. When constructing a new development, we focus on smaller buildings with 4-10 units. These structures have fewer permit restrictions, require less time to build, and appeal to a wider range of buyers than larger buildings.

Step 4: Financial Analysis

We’re always looking to optimize returns for our investors. Just as importantly, we want our projected returns to be as accurate as possible for our investors.

So we carefully conduct a financial analysis for any property we’re seriously considering. This means projecting total costs, estimating the ARV (after-repair value), and calculating a realistic ROI for the project. We publish our figures on our website so you can review the financials before deciding to invest in a specific project.

Step 5: Due Diligence

If a property ticks all our boxes to this point, it’s time to drill into the details with a thorough due diligence check. This includes:

Inspection. If we plan to keep the existing structure, we have a licensed inspector assess the physical condition of the property to alert us about any potential problems.
Survey. We confirm the geographical boundaries of the lot, including any easements.
Title research. We ensure that the current owner has the legal right to sell and that there are no encumbrances or property disputes to worry about.
Environmental checks. Depending on the area, we may conduct an environmental assessment to avoid any unforeseen liabilities from issues like soil contamination or flood risks.

We only proceed with a project once we have confirmed that every aspect of the deal aligns with our strict criteria and goals.

Invest in a Pre-Vetted Deal with Gatsby Today!

You can invest with confidence knowing that we carefully vet each property based on our strict selection criteria.

Explore our open investment opportunities and leverage the expertise of Gatsby Investment to maximize your return potential while minimizing your risk.

Sign-up to view investment opportunities

Gatsby Investment’s Track Record

Since our founding in 2016, Gatsby Investment has successfully acquired over 85 properties as of February 1, 2025. We proudly maintain a 100% profitable track record, with no losses on any deal to date. View completed deals

19k+

Registered members on the platform

22%

Average annualized net return to investors from 2016–2024

Successfully acquired deals