Vacation Rental Investment Information
Vacation home rentals have been growing in popularity in recent years because of their high demand and profitability. But short-term rentals require more work than long-term rentals because of the high renter turnover. Not only do you have to constantly find new renters to keep your unit occupied, but you also have to manage the check-in process, cleaning, and re-stocking of essentials for each guest. This demand on time makes it hard for individual investors to keep their short-term rentals occupied and well-managed on their own. With Gatsby Investment, you get a chance to invest in those properties, completely passively, while we handle the marketing and management for you.
Vacation home rentals are ideal for investors who want the cash flow from short-term rental income plus appreciation growth over time.
Gatsby sources funds from multiple investors, which allows you to own a piece of a desirable vacation property without the financial burden of funding the property on your own. This makes high-value real estate accessible to a wider range of investors.
Short-term rentals have been growing in popularity in recent years. In addition to the many vacationers who visit Southern California every year, frequent visitors to the area (including actors, athletes, musicians, and business leaders) prefer to stay in a private residence rather than a hotel while they’re in town.
Vacation destinations in Southern California see consistently high demand and low supply, which results in an increase in rental rates and property values year after year.
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 nightly, weekly, or monthly rent, which helps cover property expenses and can provide exceptional profit to investors.
Appreciation.The value of the asset grows over time, and investors get to share in those financial gains.
Tax benefits.Certain real estate holding costs are tax-deductible, reducing your income tax burden.
Ownership of a piece of California real estate.Gatsby provides an ownership stake in the underlying real estate.
A hedge against inflation.Investing in rental properties can make inflation work for you because you can increase your rental rates as inflation rises.
Stability.Real estate is a tangible asset and is less volatile than the stock market and other common forms of investments.
The process of vacation home rentals
Gatsby’s vacation home rentals are located in central areas that attract short-term renters. Our team of real estate analysts scout properties in close proximity to airports, entertainment venues, restaurants, malls, parks, etc.
We focus on vacation destinations throughout Southern California that have favorable regulations for short-term rentals. These include popular areas like Los Angeles, Palm Springs, Lake Arrowhead, Joshua Tree, and Big Bear. And we target homes for under $5 million, which have statistically performed better overall than higher-value properties.
We look for consistency over seasonality. Some properties would be fully-booked during peak season but would experience high vacancy during the off-season. Instead, Gatsby focuses on mature rental markets with more consistent demand and a steadier rental income stream. Los Angeles, for example, is a well-established rental market that people have been visiting since long before the short-term rental market became popular.
Our thorough short-term rental vetting process involves running local comps, calculating rental income projections, estimating vacancy rates, exploring the neighborhood, and determining the value-add potential of the home to confirm that it would be a good investment.
Once we have negotiated and closed on the purchase of the home, we do a light renovation of the property, fully-furnish the home, and prepare it for renters. We also consider value-add options, like converting a spare bedroom into a home movie theater or a gym, depending on the preferences of the target audience for that property type in that location.
We use our own booking engine software www.sharedroof.com to book and manage all the short-term rentals. We advertise this page on popular websites like Airbnb, Vacasa, and VRBO to find short-term renters.
Our experienced team handles every aspect of the process from start to finish. We find the property, negotiate the deal, secure the financing, supervise any renovations and design, oversee the property management company, and handle the accounting services (including investor distributions, 1065 tax filings, and Schedule K-1s).
The option to exit or continue for another five years
Vacation home rentals are offered in five-year terms. Throughout the five-year period, any rental income will be disbursed to investors quarterly.
Three months before the end of your investment period, Gatsby will order a new appraisal. At that point, depending on the interest rate and appreciation growth, we may refinance the property to pull money out and return original investments back to the investors. Whether the property is refinanced or not, we will contact investors via email to offer the option to sell your shares or to continue your investment into the next five-year period. This process will be repeated every five years.
Gatsby is always following market trends and watching for new opportunities in an effort to consistently bring you the real estate deals with the greatest potential.
To that end, our projects follow three investment stages:
- Coming soon. A sneak peek at the potential deals we’re considering for future investments.
- Pre-investment. A way for investors to place a reservation in a pending acquisition with no cost or obligation to the investor.
- Open investment. A project that is actively accepting new investments.