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.

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.

Why Affordable Homes are a Better Investment than Luxury Homes in Los Angeles

Luxury homes may be sexier than modest homes, but data shows that they typically aren’t the better investment. Data shows that affordable homes typically outperform luxury homes as investments.

This phenomenon is worth a closer look. So let’s figure out why affordable homes are generally a better investment than luxury homes.

One quick note before we begin: There is some debate about what constitutes affordable and what constitutes luxury. For the sake of this article, anything under the median home price in LA ($1,005,000 as of August 2024) is considered affordable, while anything over $5 million is considered luxury.

Affordable Homes Have a Wider Pool of Buyers

Because affordable homes are accessible to households with less income, there is a larger buyer pool for lower-end properties.

According to 2023 census data, 40.8% of LA households earn $100K or more annually. Assuming a 20% down payment, these households could afford a home with a purchase price of up to around $625,000. Luckily, many buyers are selling their current homes, giving them a larger down payment and allowing them to purchase properties around the $1 million median.

Only 16% of households in Los Angeles make upwards of $200,000 per year, making it much more difficult to find buyers who can afford a house priced at over $1 million.

There are no tracked statistics on how many people in Los Angeles make enough money to afford a luxury property, but it is a safe assumption that the number is far below 16% of households.

Affordable Homes Appreciate Faster

Because there is more demand for modest homes, they appreciate faster than luxury properties.

The median price for luxury properties (as defined in this Douglas Elliman study as the top 10% of the market) actually decreased by 10.5% in Q1 2024 compared to Q1 2023. During the same period, the median home price in LA increased by 13%!

Affordable Homes Sell Faster

With a larger buyer pool and greater demand, affordable homes sell faster than luxury properties.

While the time it takes to sell a property varies significantly by location, market conditions, and property specs, it generally takes luxury homes around 96 to 147 days to sell. For comparison, the median number of days spent on the market in LA is 47.

The ROI Can Be Better on Affordable Homes

Greater demand can drive up prices. And faster sales can save you money on holding costs. Both of these factors can mean a better ROI (return on investment) on affordable homes than luxury properties.

But there’s another big reason lower-priced homes provide better returns: the Mansion Tax.

In April 2023, the so-called Mansion Tax went into effect in Los Angeles. Formally known as Measure ULA, this initiative levies a 4% charge on all property sales above $5 million and a 5.5% charge on sales above $10 million. So if you sell a $6 million home in LA, you’ll pay $240,000 in extra expenses. Naturally, this severely cuts into your profits from the sale.

How to Invest in Affordable Homes in LA Without the Hassle

The potential downside of choosing affordable homes over luxury homes is that you have to complete a higher volume of deals to earn the same amount of money as you could on fewer luxury deals. And you might not have the time or patience to handle that yourself.

That’s where Gatsby Investment comes in!

We make affordable residential real estate investments accessible to investors who prefer passive returns to hands-on involvement.

Traditionally, investors only pooled funds for high-value commercial deals like office buildings and large apartment complexes. If you wanted to invest in a smaller deal, you had to fund and manage the entire project yourself (perhaps with the help of a mortgage lender and/or property manager, but you would have been the owner, solely liable for the project’s success).

With Gatsby, you can buy into a real estate syndication deal for as little as $25K, and have the entire project professionally managed by our real estate experts.

Take advantage of affordable real estate trends without the hassle. Invest with Gatsby today!

What the Fed’s Interest Rate Cut Means for Real Estate Investors

For the first time since March 2020, the Federal Reserve has cut interest rates. And not just by the quarter-point analysts were expecting, but by a more substantial half-point. This could be the catalyst for the market shift many real estate investors have been waiting for.

Here’s what the recent rate cut means for the real estate market in general and for you, as an investor, in particular.

What This Means for the Real Estate Market

Lenders rely on the Fed’s interest rates to set mortgage rates for real estate financing. When federal rates fall, mortgage interest rates do too. In fact, we’ve seen lenders reducing rates lately just because they expected the Fed to cut rates.

Lower interest rates mean it costs less to borrow money. And this has a ripple effect that extends throughout the financial markets and housing sector.

Lower interest rates give buyers more purchasing power. They can afford a higher purchase price, knowing that less of their mortgage payment will go toward interest. So buyer demand increases. Increasing demand can lead to higher property values and more market transactions.

Just as importantly, more property owners may be willing to sell now that interest rates are lower. Not only because prices could increase, but also because they know they can use their proceeds for a down payment on a replacement asset with a reasonable interest rate.

For a deeper dive on this topic, check out The Impact of Interest Rates on Real Estate Investing.

What This Means for Our Investors

Investors are excited about the Fed’s rate cut for two key reasons:

New acquisition opportunities. With the lower cost of borrowing, your investment dollars go further. And, as we see more sellers enter the space, you’ll have more inventory to choose from.
Stronger exit strategies. Increased buyer demand makes it easier to achieve quick property sales at favorable prices.

How Gatsby is Staying Ahead in a Changing Market

At Gatsby Investment, we believe this rate cut is a positive development for both the real estate market and our investors.

We remain committed to capitalizing on evolving market conditions while staying vigilant in managing risks. While we always underwrite deals based on current market conditions, the recent rate cut could create more favorable circumstances for our projects.

With this in mind, we are optimistic that our investments can exceed initial performance expectations, and we’re excited about the potential benefits this could bring to our investors!

If you’re ready to take advantage of our changing real estate market, explore the investment opportunities available through Gatsby and get started today!

How Interest Rates Impact Real Estate Investments

Changing interest rates impact real estate investments in multiple ways. Not only do interest rates affect your return on investment, but they also cause larger market shifts.

Here’s a quick look at:

How interest rates affect your investments,
Current rate trends, and
Smart strategies for dealing with higher inflation than we’re used to.

Looking for a deep dive into interest rates, check out our detailed article on interest rates and real estate investing.

How Do Interest Rates Affect Real Estate Investments?

Interest rates affect real estate investments in three key ways:

1. The Cost of Financing

Higher interest rates increase the cost of financing, making mortgages and other loans more expensive. This increased cost typically dampens buyer demand. And this means less buyer competition and greater negotiating power for the buyers who remain in the market.

Lower interest rates decrease the cost of financing. This encourages more buyers and investors to enter the market, often leading to increased demand and more buyer competition.

2. Property Values

Property values are generally inversely related to interest rates. When rates rise and demand decreases, property values tend to stabilize or decline. This can be a good opportunity for investors to buy properties for less than they would be worth under low interest rates.

Conversely, low interest rates can boost property values by incentivizing more buyers to purchase homes while the cost of borrowing is low.

3. Rental Yields

High interest rates may lead to higher rental yields. This is because fewer people can afford to buy homes when rates are high, so more people are looking to rent. Investing in rental property can be particularly lucrative during periods of high interest.

When rates are low, we typically see the opposite. Increased home buying reduces rental demand, which can soften rental yields. Of course, with lower interest rates, investors don’t need to charge as much in rent to cover their holding expenses.

What Are Interest Rates Doing Now?

Mortgage interest rates in the US have been trending downward recently. As of mid-September 2024, the average ratefor a 30-year fixed-rate mortgage is around 6.2%. This is down from a high of 7.8% in October 2023 and 7.2% in May of this year.

These declines are thanks to lower rates of inflation and expectations that the Federal Reserve will reduce short-term interest rates. If the Fed decides to cut rates further, mortgage rates could continue to decrease into 2025.

Today’s rates are high compared to the historic lows of the long recovery period from the housing market collapse of 2008. But our analysis of interest rates over time shows that today’s rates are still lower than average. Let’s not forget about those double-digit rates of the 1980s!

Steal Our Strategy: How Gatsby Manages Higher Interest Rates

Want to know how to manage higher interest rates? Here’s how the professionals at Gatsby do it.

Purchase at a Discounted Price

Knowing that our interest expense will be higher when interest rates are up, we pad our margins. Purchasing properties at below-market values allows us to reduce our overall expenses so we can maintain strong returns.

And how do we get properties below market value? Well, we have a few strategies. First, we find unconventional off-market deals. Since these properties are not listed on the open market, there is less competition, so we have greater negotiating power. We often focus on distressed properties with highly motivated sellers who are willing to let the property go for less than it’s worth. We also rely on our network of real estate brokers and agents to alert us to potential below-market deals.

Add Value

When interest rates are high, expensive turn-key rentals are less appealing. Instead, we often buy properties we can add value to and sell quickly to recover our investment. This reduces our long-term interest expense.

Single-family home flips and multi-family developments are both strong options for adding value and getting fast returns.

Watch for Future Opportunities to Refinance

While we always factor interest rates into our vetting process, we don’t want to pass up a great opportunity just because rates are higher than normal, especially if the higher rates have resulted in lower prices! So we take advantage of these opportunities as they come and continuously track interest rates so we can refinance when rates dip.

Build Your Real Estate Portfolio with Gatsby

If you want to build a real estate portfolio that makes smart use of interest rate changes, invest with Gatsby!

Our pre-vetted deals are available to all accredited investors (even if you live outside of California or even outside of the US). You get to leverage our industry expertise to make the most of your real estate investments. And because we handle every detail of every deal for you, you get to enjoy the benefits of real estate investing without the hassle, time commitment, or high upfront cost of traditional real estate investments.

Don’t let higher interest rates prevent you from building a profitable real estate portfolio! Explore our unique real estate opportunities and place your investment today!

Understanding Real Estate Market Cycles

As a real estate investment firm, Gatsby Investment uses real estate market cycles to inform our decisions and strategies. It’s not that we’re trying to time the market; it’s just that we understand certain real estate projects perform better during certain phases of the real estate cycle.

Here’s a peek behind the curtain at our real estate investing strategy based on market cycles.

What are Real Estate Market Cycles?

Real estate market cycles are the never-ending circle of distinct phases that we see play out in the market over the long term. There are four phases that continuously repeat:

Expansion. Steady growth in demand and values.
Hyper Supply. A total misnomer, hyper supply is when demand far outweighs supply. This is what we typically think of as a seller’s market.
Recession. Demand drops, leading to a slow market, and possible dips in property values. This is the typical buyer’s market.
Recovery. Demand and prices slowly rebound to pre-recession levels.

Real estate cycles are ruled by supply and demand, which can be influenced by factors like:

Interest rates.
New construction.
General economic conditions.
Population shifts.
Government incentives.

Interestingly, different cities can be in different phases of a cycle. For example, during the peak of the pandemic-fueled housing boom, many smaller markets were still in the hyper supply phase while large cities entered the recession phase. And now, while much of the country is slowing into a recession phase Los Angeles and San Diego are both among the top 10 hottest markets to watch this year.

It’s also worth noting that different property types can also be in different phases, even in the same market! For example, the rental market might enter recession earlier as renters become homeowners, but then it moves into recovery faster as would-be homeowners get priced out of the housing market.

For a deep dive into the real estate cycle, check out The Investor’s Guide to the Real Estate Cycle.

Gatsby’s Strategy for Each Phase of the Real Estate Cycle

Gatsby Investment is focused on low-risk investments with the potential to perform well in every phase of the real estate cycle.

For example, multi-family developments are a sound investment as long as there is enough renter demand to warrant building new rental units. Additionally, build-to-rent (BTR) projects work well in any market that has renters who want living spaces that feel more like a home than an apartment.

Having said that, we also want to capitalize on market shifts, so you’ll often see us take on special projects during different phases of the real estate cycle. Here are some examples:

During the expansion phase, we might add local California vacation rentals to the mix. Vacation rentals work well in expanding markets when people have the financial stability to travel and enjoy a week or more away from work.

During the hyper supply phase, we might increase our house flips, especially if we can add more value with an ADU (accessory dwelling unit) addition. This lets us use the market’s momentum to increase the value of the property by even more than the improvements.

During the recession phase, we might explore more affordable housing options, such as Section 8 subsidized housing. These units are in exceptionally high demand in recessed markets when more people qualify for this program with its strict income limits.

During the recovery phase, we might consider more distressed properties. Following a recession, there are often more properties with deferred maintenance issues or financial trouble, which gives us more leverage to negotiate a below-market purchase price.

Build Your Portfolio with Gatsby

Are you looking to build a real estate portfolio that performs well throughout each phase of a real estate market cycle? Take advantage of Gatsby’s strategy by investing with us!

Our pre-vetted deals are open to all accredited investors, even those who live out of state or out of the country. You can buy into our expertly-analyzed projects with low investment minimums, and leverage our industry experience to maximize your return potential while minimizing any risk.

We’re excited to serve you through every phase of the real estate market cycle!

What Does Gatsby Do for Investors?

At Gatsby Investment, we pride ourselves on delivering comprehensive real estate investment services to make the most of your real estate syndication portfolio. Our team of highly specialized experts is dedicated to maximizing the return potential on your investments while keeping the process stress-free for you.

Here’s how we support you every step of the way:

Market Research and Property Scouting. We stay on top of changing market conditions and continually search for locations that provide lucrative investment opportunities. Our network of local professionals often helps us find unique properties and off-market deals.

Evaluation of Potential Deals. Our experts meticulously analyze potential real estate deals, performing due diligence to assess risks and estimate returns effectively. Then we bring you the deals with the greatest opportunity for strong returns. For every deal we present to our investors, we have analyzed a dozen deals or more.

LLC Formation. We open a new LLC to serve as the ownership entity for each project we manage. We ensure that all investors in the deal are listed as members in the LLC with Class A units, providing a stable legal ownership structure that grants each investor an equity stake in the underlying real estate.

Property Acquisition. From negotiating purchase agreements to closing escrow, we handle the entire property acquisition process on your behalf.

Financing. Using our industry connections, we secure any necessary loans under favorable terms to optimize your investment capital. We regularly review any long-term holdings to determine if it makes sense to refinance the property so we can pull cash out to get capital back to investors faster than expected.

Architectural Design and Permitting. Our team works with award-winning architects to design spaces that appeal to a wide range of renters and/or buyers and increase the property value. We work with the city to secure necessary permits for a smooth construction phase.

Construction Management. We oversee contractors and builders, supervising renovations or new developments to make sure the work is of high quality. Despite the many challenges of construction, we do our best to keep projects on time and on budget.

Property Stabilization and Management. For long-term rentals, we find qualified tenants to fill all vacant units, optimizing rental rates to boost the property’s value.

Consistent Investor Communication. We provide regular updates on each project to keep you informed throughout the process.

Exceptional Customer Service. Our dedicated customer service professionals are available to promptly answer any questions and address any concerns so you can invest with confidence.

Marketing and Sales. When it’s time to sell the property, we develop a strategic marketing plan to attract qualified buyers at an optimal price point. We evaluate incoming offers, negotiate favorable terms, and navigate the sales process efficiently.

Financial Management. Our team handles all financial aspects of each project, including accounting and Schedule K-1 filing, to ensure transparency and compliance with applicable regulations.

Prompt Proceed Disbursements. We promptly distribute proceeds to investors, ensuring you receive your returns quickly.

At Gatsby Investment, it is our pleasure to take care of the entire real estate investment process from start to finish for our investors. Whether you’re looking for a long-term rental or a quick house flip, our services allow you to maximize your ROI without investing your own time or energy in the project. You can relax, knowing that your investment is in capable hands!

Ready to take advantage of the many benefits of real estate investing? Learn more about achieving your investment goals with Gatsby Investment or contact us directly at 866.428.7291 (866-GATSBY1) for a free consultation.

Why Now is the Perfect Time to Invest in Real Estate with Gatsby Investment

As we navigate through a dynamic and ever-changing real estate market, it’s essential to recognize that every phase presents unique opportunities for savvy investors. While it’s true that real estate has faced some challenges in recent years, these very challenges create prime opportunities for investors.

At Gatsby, we pride ourselves on our ability to adjust to market changes and remain well-positioned in the current market with a strong focus on what's in demand.

Here’s why now is an excellent time to invest in real estate through our syndication platform:

1. Buying Low in a Buyer’s Market

Real estate markets are cyclical, and we are currently experiencing a period where property prices have stabilized or even decreased in certain areas. This "buy low" phase is crucial for investors looking to maximize returns. When property values are lower, we can secure high-quality assets at a fraction of their future potential value. This sets the stage for significant appreciation and sale value as the market rebounds.

2. Diversification and Risk Mitigation

Investing through a syndication platform offers diversification that individual investments may lack. By pooling resources with other investors, you can invest in properties with a lower minimum amount and build a diversified portfolio of properties. This spreads risk across multiple assets and locations, reducing exposure to any single investment.

3. Inflation Hedge

Real estate has historically been an effective hedge against inflation. As prices for goods and services increase, so do property values and rental rates. This means that real estate investments can provide a safeguard against the eroding purchasing power of your money. By investing now, you position yourself to benefit from this inflation protection, ensuring your investment retains its value over time.

4. Consistent Demand in Los Angeles

Every city can be in a different stage of the real estate cycle. Los Angeles is currently experiencing a shortage of homes and a significant need for particular housing types. This consistent demand and growth make LA a resilient real estate market. Gatsby Investment has a specific focus and extensive market knowledge in Los Angeles, ensuring we can navigate and capitalize on this dynamic market. Our expertise allows us to identify high-demand properties and secure strong returns for our investors.

5. Strategic Property Development

The demand for rental properties remains robust, especially in high-demand markets like Los Angeles. With rising housing prices and changing lifestyles, more people are opting to rent rather than buy. Gatsby focuses on strategic property development, creating multi-family properties with large, more affordable units that cater to the needs of today’s shared-living renters. Our developments are designed to meet the growing demand for rental properties, ensuring strong and stable returns for our investors.

6. Utilize Our Relationships and Connections

Gatsby has established a strong reputation in the industry and is a market-leading company in Los Angeles. This allows us to access off-market deals, set favorable prices, and negotiate terms that individual investors might not achieve alone. We benefit from volume discounts on deals, labor, and materials. Additionally, our longstanding relationships with lenders enable us to secure favorable interest rates.

7. Technology-Driven Platform

Gatsby uses proprietary software to allow investors to access unique investment deals, stay organized throughout the process with regular updates, streamline operations, and manage projects in volume. This automation lowers overhead costs and leads to faster completion, ultimately generating higher returns for investors.

Discover Investment Opportunities with Gatsby!

At Gatsby, we believe in the value of investing across all market phases, recognizing the opportunities each phase presents. There is potential in every market as long as you know how to buy and what strategies to use. Ultimately, consistent investing is essential for growth and protecting your money from inflation.

By investing now through Gatsby’s syndication platform, you can capitalize on low property prices, benefit from diversification, hedge against inflation, and leverage our expertise to maximize your investment potential.

Join us and take advantage of the unique opportunities today’s market presents. If you have any questions or need further information, please don’t hesitate to contact our investment team. We are here to help you navigate and succeed in your real estate investment journey.

The Psychology of Investing: 5 Mental Traps and How to Avoid Them

Is your mind keeping you from making sound investment decisions? How you think about investing can have a huge impact on your success!

In this psychology-of-investing post, we're looking at five common mental traps that investors fall into. We'll explain:

What each trap looks like,
Why they're a problem, and
How you can overcome them.

By understanding and sidestepping these psychological pitfalls, you'll be better equipped to make smart, confident investment decisions.

So let's dive in and find out how to keep your mind from messing with your money.

1. The Analysis Paralysis Trap

What it looks like: I don’t want to start investing until I have learned everything about every investment type so I can always optimize my portfolio.

Why it’s a problem: Time spent learning is time not spent in the market, which means missed opportunities. Worse, the longer you wait to start, the less time you have to enjoy the compounding returns that provide exponential growth.

How to overcome it: Take the leap and learn as you go, knowing that you’ll make mistakes along the way. The sooner you start, the sooner you can make your mistakes, learn your lessons, and hone your investment strategies.

2. The Loss Aversion Trap

What it looks like: Sure, I’d be happy to gain $1K from investing, but I’d be devastated to lose even $500. The physiological pain of losing money is way worse than the pleasure of gaining money.

Why it’s a problem: There is no reward without some risk. Low-risk investments, like bonds, CDs, and treasury bills) might not even pay enough to keep up with inflation, meaning your portfolio would lose purchasing power over time anyway. If you invest long enough, you will lose money at some point. But that’s okay because the years with high returns offset the losses from temporary market dips.

How to overcome it: “Set it and forget it.” Commit to a long-term investment strategy and resist the urge to constantly monitor your portfolio’s performance. Instead, check in just once or twice per year to see if adjustments are needed. Make sure your portfolio is diversified across varied investment types. This way, if investment struggles, your portfolio will remain bolstered by the well-performing investments.

3. The Sunk Cost Trap

What it looks like: I have so much money invested in this stock that keeps going down. As soon as the value comes back up to the break-even point, I’m selling!

Why it’s a problem: Continuing to invest in a failing venture because of money already spent can lead to further losses and missed opportunities. In the case of underperforming stocks, you would be better off financially if you sold the stock at a loss and put that money into stocks that are performing well. You can’t recoup the money already spent, but you can decide how to move forward.

How to overcome it: Regularly evaluate investments objectively and be willing to cut losses so you can move that investment capital into a vehicle that is seeing gains.

4. The Pseudo-Certainty Trap

What it looks like: Yikes! My stock portfolio is losing money, and I need to win this money back by any means necessary. Maybe the high-risk cryptocurrency market can help my portfolio bounce back? Let’s try it!

Why it’s a problem: This is a gambler’s mentality. When you’re losing money, you’re so desperate to earn it back that you take unnecessary risks. By all means, cut your losses and move your money into assets that are performing better. But don’t look for a quick fix in high-risk vehicles. You’re statistically more likely to dig yourself into a deeper hole that way.

How to overcome it: Practice patience. You might not be able to recoup losses immediately, but that’s ok because you can recover them over time. Instead of panic-buying into high-risk deals, switch to a proven strategy, like investing in real estate.

5. The Superiority Trap

What it looks like: Not to brag, but I’m smarter than the average person, and I can use my intellect to outperform the market.

Why it’s a problem: Statistically, beating the market as an individual investor is highly unlikely. This is largely because 1) you don’t know what you don’t know and 2) markets are so complex that unforeseen circumstances can pop up out of nowhere. Relying on your own knowledge and experience reduces your chances of capitalizing on opportunities.

How to overcome it: Leverage the knowledge and experience of industry pros. Take real estate for example. Investing in a turn-key property on your own requires you to shoulder the financial burden and market risk alone. You have to know how to find and screen tenants, manage day-to-day operations, avoid legal issues, and increase rental property value over time. Any blind spot can result in losses. By comparison, if you were to invest in a real estate syndication project, you would have a whole team of experts handling every detail of your investment to maximize return potential while minimizing risk.

The Bottom Line

We like to think that we’re all perfectly rational investors, being led by the numbers. But the psychology of investing shows that your subconsciously biased thoughts play a role too.

The good news is that an extra dose of mindfulness goes a long way toward combatting these mental traps. And with the tips listed in this post, you can train your brain to make better financial decisions.

What Makes Gatsby Investment’s Platform Unique?

Once upon a time, unique, high-value real estate deals were available only to the wealthy elite. But today, Gatsby Investment is bringing these deals to everyday investors through a unique online investment platform.

Gatsby’s real estate syndication investment model allows investors with zero prior experience to buy into complex real estate development projects. These deals are expertly vetted and managed from start to finish by Gatsby’s team of real estate analysts and project managers. So your returns are completely passive. You receive all the benefits of a professionally managed real estate development project without investing your own time and energy or shouldering the upfront financial costs alone.

But what makes Gatsby Investment’s platform unique? Why should you trust Gatsby with your investment capital?

Here are five ways Gatsby Investment stands out from other real estate crowdfunding platforms.

Localized Expertise

Based in Beverly Hills, Gatsby focuses heavily on the Los Angeles housing market. There are several compelling reasons to invest in LA real estate, including:

Consistently high demand. With 63% of Angelinos renting rather than owning, there is a wide investor-buyer pool. And, despite the high cost of living, LA’s impressive amenities continue to draw residents from all over the world.

High rental rates. As of June 2024, the average rent in Los Angeles is $2,111 per month, 39% higher than the national average. Renters are willing to spend serious cash to live in Los Angeles. A recent analysis found that LA rents increase nearly 2% more than the national average each year.

Favorable housing regulations. To combat the chronic SoCal housing shortage, California has enacted legislation that makes it easier to develop new housing units. And Gatsby is capitalizing on these opportunities. Take the recent zoning changes, for example. Developers can now build 4-10 units on many lots zoned for single-family. By purchasing affordable single-family lots and building multi-family developments from the ground up, we can create much more valuable properties. Or consider the ADU (accessory dwelling unit) legislation, which streamlines the permitting process to allow property owners to build a separate living space on their single-family lots. By adding ADUs to our home flip projects, we can quickly increase return potential.

Strong appreciation over time. Since 1990, home values have risen nearly 9% per year on average!

By focusing locally, we have been able to stay on top of changing trends and adapt our strategies to create higher return potential for our investors.

A Strong Niche

We have used our local expertise to develop a strong strategic niche in the SoCal market.

We focus on new construction multi-family developments of 4-6 units.

Building from the ground up allows us to take full advantage of California’s zoning law changes. We can purchase a low-cost single-family lot in an in-demand area, and construct multiple units on the lot, making the most of the land investment.

We focus on smaller developments because they are in greater demand. They are accessible to more investors than larger apartment buildings, so we have a wider pool of potential buyers. Not only are these developments less expensive than buildings with dozens of units, but they are also eligible for more financing options. The high demand for these smaller multi-family buildings increases the likelihood of a quick, highly profitable sale upon completion of the project.

Each unit in our developments is designed for today’s renters. We’re seeing increasing demand for larger units, both from families who have been priced out of the housing market and from young adults who live with multiple roommates to keep housing costs lower. Each unit offers 3-5 bedrooms. The bedrooms within the units are sized similarly to one another, making it ideal for roommates who are splitting the rent evenly. And each bedroom comes with its own bathroom, which is important for both families and roommates.

Focusing on this niche has provided repeated success, and we increase our efficiency with each new project of this type.

Proprietary Software

Gatsby Investment’s online platform was designed to streamline the investing process and manage projects effectively and efficiently.

From our convenient, user-friendly dashboard, you can:

Sign up to be notified of new investment opportunities as they arise,
Review the details of each project, including the property address, estimated costs, and projected returns
Apply to be verified as an accredited investor through our third-party verification service, Verify Investor,
Choose your project(s) and place your investment,
Sign the applicable paperwork to become an official member of the LLC that owns the property,
Track the progress of your project(s),
Receive applicable tax forms, and
Review the project’s final financials so you know how much to expect when we disburse funds upon completion of the project.

Long-Standing Industry Relationships

Operating locally over the last several years has enabled Gatsby to build relationships with industry professionals who can help increase returns for investors.

We work with real estate agents and brokers to find off-market properties that can be purchased below market value. And because of our relationships with local lenders, we are able to negotiate favorable terms on financing, like lower interest rates. This reduces our interest expense, which increases our bottom line on the project.

We also have well-established relationships with local architects, designers, and builders. Our repeat business gives us bulk pricing on materials, reduced rates on labor, and ensures consistently high quality in our builds.

A Track Record of High Returns

Even more important than Gatsby’s unique systems are its results.

Our track record speaks for itself. From 2017 through 2023, Gatsby provided average annualized returns of 23% to our investors! And we have a 100% success rate, having never lost money on a deal.

Our localized expertise, strong niche, proprietary software, and long-standing industry relationships all contribute to our above-average returns. And, while market conditions are always changing, the Gatsby platform is always ready to meet these changes head-on.

Invest with Gatsby Today!

Are you ready to invest in real estate with the unique advantages of Gatsby Investment’s platform? Join the 15,000 investors who trust Gatsby to provide outstanding results. Explore investment opportunities and place your investment today!

Rental Management Secrets from a Luxury Property Manager

Managing rentals is a classic method of making money in residential real estate. In fact, properly building and managing a rental portfolio is one of the best ways to become a millionaire through real estate!

Even if you’re new to real estate investing, you might already know the basics of rental property management: lease apartments, collect rent, address maintenance issues, renew leases, repeat. But to be a successful rental owner in a competitive market, you need to know much more than the basics.

So today, we’re sharing rental management secrets from a luxury property manager (that’s me!).

Hi, I’m Michelle, Your Luxury Property Manager

Long before I started writing articles on real estate investment and finance, I was a luxury property manager and real estate investor. I professionally managed hundreds of luxury units throughout Los Angeles and San Diego for years before building and managing my own small portfolio of luxury single-family homes.

And let me tell you, I’ve learned a thing or two about what it takes to successfully manage rental properties, especially in the luxury market!

Whether you’re a single-family rental property investor, looking for tips to elevate your rental management, or a multi-family developer, looking to lease up your new construction properties, you’ll find some advanced tips in this article!

Disclaimer: property management rules and regulations vary from one market to the next. Make sure you understand your local laws.

With that said, let’s dive into my rental management secrets with a look at the development process.

Secrets for Designing and Building Successful Developments

Developing spaces that appeal to today’s rental market is step one in finding rental management success. Get in on these industry secrets before they go mainstream.

Layouts that Serve as “Family Living” or “Shared-Living” Spaces are in High Demand

Renter needs have changed as the cost of housing has increased substantially in recent years. While one and two-bedroom units have been popular for decades, demand is shifting to larger units with more bedrooms.

These larger units are serving two specific demographic groups:

Growing families who have been priced out of the housing market. This group is driving the increase in build-to-rent homes, which are characterized by larger units that feel like a home and can comfortably accommodate at least one or two children.
Young adults practicing shared living (aka co-living) with multiple roommates. To make rent more affordable, many renters are looking to split the rent between multiple roommates. But they need a comfortable layout to make this arrangement work well. Three to five bedrooms, all similarly sized, and all with a private bathroom make for an ideal shared living layout.

Proptech Upgrades are a Competitive Advantage

Today’s renters are tech natives who grew up in the age of technology and are far more comfortable with it than without it.

Residential proptech can be a good investment if it serves your demographic, particularly when it helps protect your property. Consider adding smart home features like locks, lights, doorbells, and temperature control to make your units safer, more comfortable, and more energy efficient.

Low-Maintenance Luxury Amenities Will Save Money and Your Sanity

Many developers and investors mistakenly believe they need to offer common area amenities like pools, spas, and fully equipped fitness centers to attract renters. In reality, these amenities require constant maintenance and repairs. Not only does this cost you money, but every time an “out of order” sign is placed somewhere on your property, it invites criticism.

Instead, focus on low-maintenance amenities that feel luxurious, like rooftop decks, for example. Or a “wellness” center with yoga balls, pilates mats, and free weights rather than complicated cardio equipment and weight machines.

Also, don’t underestimate the value of convenience amenities, like parking spaces, on-site storage units, and facilities for accepting package deliveries.

Secrets for Successfully Leasing Units

As Operations Manager for a 298-unit new construction project in Marina del Rey, I worked with a stellar team of leasing specialists to take the property from vacant to fully occupied.

Here are some of the secrets of our success.

Pre-Leasing Builds Buzz

Most cities allow property owners to begin leasing units before the units are ready for occupancy. Pre-leasing allows you to speed up your cash flows to help you recover your investment sooner. Just as importantly, pre-leases work as a marketing tool. You can promote the fact that multiple units have already been claimed to create a sense of urgency for other prospective renters.

Staging (Whether Physical or Virtual) Helps Prospects See the Potential

Renting empty units can be difficult because there’s nothing to help the renters feel at home in the space. Luckily, there are a few ways to use staging to address this problem.

If you have a large apartment building, consider setting aside a unit (or two) to serve as a model. This unit will be professionally staged to show prospects what their unit could feel like. You’ll take all prospects through this unit on the community tour, possibly showing them a vacant unit as well once they see what can be done with the space. Yes, you’ll have vacancy losses for this unit, but the increased conversion rate of prospects to tenants can offset this loss.

If a model unit doesn’t make sense for your property, you have two staging tools to employ:

Virtual staging. Have a photo editor enhance your listing photos with digital furnishings and art to make the space come to life.
Vacant staging. Add a few strategic pieces to warm up a vacant unit. For example, coffee service on this kitchen counter and fresh towels in the bathrooms instantly give these key rooms a homey touch. You can also make bedrooms feel brighter by adding a plant with uplights in one corner.

If you have vacant units to lease, you might want to combine virtual staging with vacant staging, so the unit shows well in the marketing materials and in person.

Managers Add Life to Big Empty New-Construction Buildings

Big empty buildings give off a creepy vibe, no matter how well designed. So if you have a new-construction multi-family development to lease up, you need to find ways to inject life into the property for your tours. Here’s how:

Stage a few balconies and patios. Set up bistro sets, outdoor chaises, and plants on some of the vacant unit’s outdoor spaces.
Bring in some noise. To prevent the eerie quiet, pipe some music into common areas and/or birdsong into outdoor courtyards.
Invite people to hang out at the property. To really bring your building to life, invite your friends to hang out at the property during peak leasing hours. They can enjoy the amenities, read a book on a balcony, or enjoy a cup of tea and a chat with their friends on a patio.

Strategic Concessions Incentivize Prospects

If you have lots of units to lease, a concession can help you bring occupancy up quickly. Concessions are often better than rent reductions from a property management point of view. If you offer lower rental rates, it will be harder to convince residents to pay the higher market rates at renewal time. But, if you offer two weeks free, or even one month free, residents will be accustomed to paying market rate rents through the rest of their lease term, so they won’t have such a shock if rates increase at renewal time.

Secrets for Resident Retention

It’s not enough to fill your units with renters; you also have to keep them. Reducing resident turnover lowers turn costs and vacancy losses between tenants.

Building a Community within the Development Leads to Less Turnover

If your residents become friends, they will be more inclined to stay in the building longer. They won’t want to risk giving up their social group by moving out. So you might want to invest in events that bring everyone together. And there are lots of options, depending on your demographics:

Wine tasting in the clubhouse or courtyard
Community game nights
Ice cream socials
Movie screenings
Family cookout at the community grill

The goal is to introduce people and let them get to know each other. The more opportunities they have to meet, the more likely they are to establish relationships outside the community events.

Surprising and Delighting Residents Build Loyalty

There are many ways to make your renters feel valued without spending too much money. I love to delight residents with small surprises throughout the year, such as:

A “Welcome Home” gift basket on move-in day,
Coffee gift cards on International Coffee Day (October 1st),
Poinsettias during the holidays,
Easter or May Day baskets with candy, and
Beach towels during the summer.

Offering Flexible Lease Renewals Increases Retention

Instead of only offering one-year lease renewals, give your residents more options so they can choose a term that works for them. You might offer six-month, three-month, or even month-to-month lease terms in addition to the one-year option.

Of course, the longer they stay, the more stable your cash flows. So you should incentivize them to take the longer lease options by making those more affordable. Depending on your local market conditions, you might offer a one-year lease at 5% below market value, a 6-month lease at market, a 3-month lease at 5% above market, and a month-to-month lease at 10% above market.

You Can Always Opt to Leave the Rental Management to the Experts

If you don’t have the time or desire to master rental property management yourself, you can always leave the management to professionals.

One option is to hire a property management company to manage the properties you own. A good property manager will know which strategies work best for your properties.

If you want all the benefits of investing in real estate, but you’re overwhelmed by the process of finding, acquiring, renovating, and managing properties, consider investing in real estate syndication.

Real estate syndication is an investment model in which multiple investors pool their capital to fund a real estate project. The project is managed from start to finish by industry experts (called real estate sponsors).

The syndication sponsor:

Vets potential deals,
Acquires properties with the greatest potential,
Opens an ownership LLC for the investors so they have a clear stake in the underlying real estate,
Oversees the renovation, using existing connections to hire reliable development professionals,
Manages the lease-up (if the property is held as a rental) as well as ongoing rental operations,
Coordinates the sale of the property upon completion of the project, and
Facilitates disbursements to investors.

This allows you to build a real estate portfolio with zero industry knowledge or experience. The constant involvement of an experienced sponsor also helps minimize investor risk and maximize return potential. Gatsby Investment, for example, has provided investors with average annualized returns of 23% since 2017! And, because funds are pooled from multiple investors, you can buy into a deal for as little as $10k-$20k.

Learn more about investing with Gatsby and choose your investment project(s) today!

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Gatsby Investment’s Track Record

Since our founding in 2016, Gatsby Investment has successfully acquired over 85 properties as of today. 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