Ways to Invest
Please see more details about each option below, to find which way works best for you.
1. Investing as an individual
Any individual who meets the accredited investor requirement can invest with Gatsby. To invest as an individual means to hold the investment personally in your name. This is the most common way to invest.
You must use your full legal name when creating your account with Gatsby Investment and when getting verified as an accredited investor through Verify Investor.
At the end of each applicable tax year, you will receive a Schedule K-1 tax form in your legal name, for you to use when filing your income tax return.
2. Investing as an entity
You can invest as an entity as long as you meet the accredited investor requirements. In this case, your entity will be the investor instead of you individually. The benefit of investing as an entity is that you put an extra layer of protection. An entity could be an LLC, S-corporation, or C-corporation.
If you are the sole owner of the entity, you will be verified as an accredited investor personally under the individual requirements. If there are multiple equity owners, each owner needs to show proof that they, individually or combined with their spouse, meet the accredited investor qualifications.
Only one company shareholder can invest per Gatsby account. However, additional shareholders can invest through the same company by creating a separate account and going through the accredited investor process themselves.
At the end of each applicable tax year, you will receive a Schedule K-1 tax form in your entity name, for you to use when filing the income tax returns.
3. Investing through a trust
You can invest as a trust as long as you meet the accredited investor requirements. In this case, your trust will be the investor instead of you individually.
At Gatsby, we accept living revocable and irrevocable trusts.
The major benefit of holding property in a trust is that the property avoids the probate process when transferring assets to the beneficiaries. Trusts may also be eligible for additional tax benefits.
If you are the settlor of the trust, you need to be verified as an accredited investor personally under the individual requirements. If there are multiple settlors, each settlor needs to show proof that they, individually or combined with their spouse, meet the accredited investor qualifications.
At the end of each applicable tax year, you will receive a Schedule K-1 tax form in your trust name, for you to use when filing the income tax returns.
4. Investing through a retirement account
You can invest through your retirement account as long as you meet the accredited investor requirements. In this case, your retirement account will be the investor instead of you individually.
The benefit of investing through a retirement account is that they provide additional tax benefits.
At Gatsby, we accept Self-Directed Solo 401(k), IRA LLC Single-Member, and IRA LLC Multi-Member.
Some types of retirement accounts require that the investment property generates passive income for at least one year, or that a custodian manage the account. Therefore, we can only accept the three types of accounts stated above at Gatsby.
Each of our properties can accept up to 25% of the total raise amount into a property from retirement funds. Our software automatically calculates of the funds available to invest in a deal from retirement accounts, so the investors don’t need to keep track of this alone.
You must use your full legal name when creating your Gatsby account and completing your accredited investor application through Verify Investor.
At the end of each applicable tax year, you will receive a Schedule K-1 tax form for you to use when filing the income tax returns.
5. Investing as a fund
Gatsby Investment welcomes fund companies to invest alongside our investors in our deal-by-deal investment projects. When investing as a fund, the fund entity itself will be the investor with an ownership stake in the property.
You must use the fund name when creating the account with Gatsby. All investors in the fund need to be accredited investors in order for the fund to invest in our syndication deals.
Once an investment is complete, Gatsby sends the disbursements to the fund account holder, and the fund then handles the distribution of proceeds to the investors in their fund.
At the end of each fiscal year, you will receive a Schedule K-1 tax form in the fund’s name for you to use when filing your income tax return.
Important!
When you create an account with Gatsby, you will be asked to provide some basic information. Once your account is set up, you can access all information available on the website. However, in order to invest, you will need to be verified as an accredited investor.
When you start the accredited application, you will be able to select how you will be investing with Gatsby (as an individual, an entity, retirement account, or a trust). It is important that you select the way you want to invest prior to applying, because the way you get verified, is the way you will be approved to invest. If, for example, you get verified as an individual, but later want to switch to an entity, you will need to go through the application again and get your entity verified.
If you would like to invest two different ways, for example as an individual and a retirement account, you will need to open two separate accounts with Gatsby and get each account verified.