Vacation Rental Investment
Vacation home rentals are an incredible investment vehicle for people who want the cash flow from rental income plus the appreciation of the property over time. If you don’t have the experience, time, or desire to manage a rental property on your own, investing with Gatsby gives you access to our team of professionals who will manage all of this for you.
Since we pool capital from multiple investors, you can own a share of a property without the burden of funding a whole project on your own. With a low minimum investment, you can own a piece of a desired rental property in the elite Los Angeles real estate market. You get to benefit from all the advantages that come with this type of investment, including tax benefits, passive rental income, and property appreciation.
Short-term rentals have been growing in popularity in recent years. Actors, athletes, musicians, business leaders, and other individuals who travel to Los Angeles often prefer to rent a home while they’re in town rather than staying in a hotel. Vacation home rentals give these visitors the chance to enjoy a lifestyle that suits them while making themselves at home in LA for however long they decide to stay.
Vacation home rentals have also become popular among locals who prefer the simplicity and flexibility of renting over owning. They recognize that owning a home comes with certain responsibilities, like time-consuming maintenance, a substantial financial commitment, and the required down-payment upfront. It often makes more sense for members of this group to rent rather than put down firm roots in any one place.
The Los Angeles rental market experiences consistently high demand and comparatively low supply. This drives growth in both rental rates and property values.
The benefits of investing in vacation home rentals
Stability.Real estate is less volatile than the stock market and has historically outperformed the S&P 500.
Cash flow.Tenants pay monthly rent to help cover property expenses and can provide profit to the investors.
Appreciation.Investors benefit from the growth of real estate values over time.
Tax advantages.Claim deductions on your income taxes for your real estate holdings.
Ownership of a piece of LA real estate.With Gatsby, you don’t just own debt-equity; you actually own a stake in the underlying real estate.
The process of vacation home rentals
Our vacation home rentals are located in central areas that attract short-term renters. We make sure they are in proximity to entertainment, restaurants, shops, gyms, movie theaters, parks, public transportation links, airport, etc.
We focus on areas throughout Southern California such as Los Angeles, Palms Springs, Lake Arrowhead, Joshua Tree, Big Bear Lake etc. and target homes for under $5 million.
We look for seasonality and consistency. Some properties would do great as short-term rentals during peak season and be fully booked, but during off season the vacancy is high. Therefore, Gatsby focus on mature rental markets for a more consistent visitation and a steadier rental income stream. Los Angeles is one of the more mature rental markets where people have been visiting long before the short-term market became popular. We also make sure each city we invest in have favorable regulations when it comes to short-term rentals.
When we have identified a property, we run the area comps, rental income projections, vacancy rates, and look at the neighborhood, value-add potential of the home etc. to make sure it would be a good investment.
When we have purchased the home, we do a light renovation of the house and get it fully furnished and ready for tenants. We also consider value-add features like converting a room to a movie theater or a gym.
A short-term rental period can range from 3 days minimum to 30 days maximum. The average rental period for these types of homes in these locations is 3-7 days.
We use our own booking engine software sharedroof.com to book and manage all the short-term rentals. We advertise this page on Airbnb, Vacasa, Vrbo, etc. to find short-term tenants.
Our experienced team handles every aspect of the process from start to finish. We find the property, negotiate financing options, secure the loan, oversee the property management company, handle the accounting services, quarterly investor distributions, 1065 tax filing, and Schedule K-1.
The option to exit or continue for another five years
Vacation home rentals are a five-year investment. Throughout this five-year investment, you will receive quarterly disbursements from any rental income. Three months before the end of a five-year period, we will get a new appraisal and may refinance the property based on the interest rate and appreciation growth. When the appraisal is complete, we will contact investors via email to give you the option to sell your shares or to continue into another five-year investment.
Depending on the new financing, Gatsby may pull money out of the deal and disburse funds back to the investors that continue the investment. The process is then repeated the same way every five years.
To bring you the most lucrative vacation home rental investment opportunities, Gatsby follows market trends closely and is always on the search for new deals. We want to keep you in the loop on potential investments as we find them.
Our projects follow three investment stages:
- Coming soon. A sneak peek at the potential deals we’re lining up for the future.
- Pre-investment. A no-cost, no-obligation way to reserve your spot in an investment type until we have secured a property.
- Open investment. The project is open to investors. You can transfer your investment funds and confirm your ownership stake in the property right away.