Multi-Family Build-to-Rent Information
OPPORTUNISTIC - GROUND-UP CONSTRUCTION + RENTAL HOLD
This unique build-to-rent investment model from Gatsby Investment provides the benefits of both a new multi-family development and a multi-family rental in one investment!
By investing in the project pre-build, you get to build equity in the property, then defer taxes on those gains by continuing your investment into the rental holding phase. And then you get to generate passive cash flow from the rental income, as well as benefit from property appreciation over time.
Beginning with new construction offers multiple advantages over buying an existing multi-family rental. We have control over the architecture and design, allowing us to create spaces that will appeal to today’s renters. And, by building from the ground up, we create instant additional value and build equity in the property before moving into the rental phase.
This well-designed investment model has been created to maximize our investors’ ROI. And this is a great option for investors looking to build a passive, long-term portfolio.
The benefits of investing in multi-family build-to-rent
Unique investment model.
This model combines the benefits of new multi-family development plus the benefits of multi-family rentals. You get passive cash flow, property appreciation, tax benefits, and maximized returns. Rentals also provide additional tax benefits; since the property is held long-term, your income is taxed at the lower long-term capital gains rates rather than as earned income.Passive investment.
You won’t need to analyze properties, secure financing, oversee construction, find renters, or collect rents. Gatsby’s experienced team of well-qualified professionals will handle every detail of the acquisition, build, and ongoing rental management for you. You get to leverage our skills and knowledge to maximize your ROI.Cash flow.
Quarterly disbursements from rental income. Tenants pay monthly rent to help cover property expenses and can provide ongoing profit to investors.Possible cash-out refinancing.
Gatsby will review the mortgage loan once the construction phase is complete and determine if current interest rates and property appreciation warrant refinancing. If a cash-out refinance makes financial sense, we can pull equity out of the deal to disburse back to investors.The process of multi-family build-to-rent investing
Choosing the right lot
At Gatsby Investment, we only accept the deals with the greatest return potential. Our real estate analysts are highly selective when looking for a deal. We review dozens of properties to find a single property to pursue.
Choosing the right lot and location is key to the success of a multi-family build-to-rent project. Recent zoning changes have made it possible to build multi-family structures on certain lots that were once zoned as single-family. Not only does this help alleviate the strains of the housing shortage, but it also provides an exceptional opportunity for real estate investors. In many cases, we are able to buy a comparatively low-cost single-family home, tear it down, and then build a multi-family property from the ground up.
With heavy buyer competition, Gatsby relies on long-established industry connections to find deals that the average investor may not have access to. We work with hundreds of local real estate brokers, and we often find off-market deals that can be acquired below market value.
Every Gatsby project goes through a comprehensive due diligence process, designed to mitigate any risk and maximize investor returns.
Securing the property
When our real estate experts are satisfied that we have a winning property for our investors, we open the LLC in which the property will be held, secure any financing needed, complete all title and escrow documents, and successfully close the deal.
Building the property
Our architects create modern multi-family structures, tailored to the specific lot and designed to appeal to today’s renters.
The standard multi-family build starts by preparing the lot for the new construction. In many cases, a distressed single-family structure is torn down to make way for the new multi-family structure.
Gatsby’s properties are unique in that we build large living spaces to meet market demand for roommate situations and large families who choose to rent. Co-living with multiple roommates has become popular in metro areas such as Los Angeles, which has increased the demand for properties with more than two bedrooms. And since more families also choose to rent rather than buy, these families need affordable, spacious, and practical living spaces that can accommodate the whole family. Since many of the older rental units have only one or two bedrooms, Gatsby has found a competitive advantage in creating multi-family apartments with three to five bedrooms per unit.
Every step of the construction process is managed by Gatsby. From design and permit, demolition and construction, to the finishes. Our skilled workers confirm that every detail of the build matches our high standards. Because we have a large building team, we can minimize the time it takes to complete a project, while maintaining high quality. And, because of the volume of Gatsby projects, we’re able to negotiate deals on labor and materials and get better pricing. This all adds up to greater return potential for our investors.
Transitioning to a rental holding
When construction is complete, we find qualified tenants for each unit and get the property stabilized. Then, we order an appraisal to confirm the value of the newly built property, at which point we may refinance the loan.
Investors will now benefit from regular passive cash flow and long-term appreciation of the new asset throughout the rental phase of the investment.
The best part is that investors don’t have to invest any time or energy in the project to receive the benefits. Our professional property management team will handle the day-to-day operations for you.
Timeframe
The multi-family build-to-rent project is an approximately five-year investment.
The development phase of the project typically takes about 24 months. Once the property build is complete, we fill each unit with tenants and stabilize the property.
Gatsby will make the decision on when it is the right time to sell the property based on several factors, including general market conditions, interest rates, and buyer demand. But the target rental period is estimated to be three years. Investors will be informed when we start the property appraisal process and put the property on the market for sale.
Once the property is sold and escrow closed, investors receive their distributions from the sale of the property within 10 business days.
Placing and tracking an investment
All investment opportunities are offered directly on the website under the tab “Invest” when clicking “View all investments.”
You can click on an investment project to view detailed information about each specific deal, including the property address, financial breakdown, estimated timeframe, investment strategy, area comps, and photos of the property. There is also an ROI calculator feature available for each project which states the minimum and maximum investment available. The calculator also allows you to enter an investment amount and view your estimated target share in the property and estimated return.
Placing an investment is easy! You will be guided step-by-step to finalize your investment request on the website. When your investment has been placed, you will be given the wire transfer and ACH instructions. You will then have five business days to send the funds and secure your place in the investment.
Once the project is active, you can track your investment from start to finish through the user-friendly online dashboard. You’ll see the project’s progress bar as well as progress photos of the new construction. We also send email updates when the project moves from one status to another.
You can also track your scheduled rental payouts under the “Account” tab, where you’ll find “Statements.”
When the property is eventually sold, you will receive your disbursements via wire transfer. After receiving the funds, you can enjoy your proceeds or look for new investment opportunities to continue to grow!