Startup hopes to formalize real estate apprenticeship

Breaking into real estate typically looks like this: A smart hustler joins a grizzled operator, soaking up all the knowledge, contacts and sources of capital they can before attempting to break off to do their own deals. It’s the master-apprentice model, applied to the world’s largest asset class.

A just-launched startup hopes to short-circuit that process, aiming to create a business it likens to the “Y Combinator of real estate,” a reference to the renowned tech startup accelerator. 

ReSeed Partners, a group of real estate operators who found each other on Twitter, will provide up-and-coming operators with the cash and support to source deals, and will help source investor funds to close on those deals. Similar to YCombinator, candidates will go through an application process, including interviews and travel to each candidate’s local market, trying to evaluate how they think about real estate, according to Rhett Bennett, ReSeed’s CEO and a former principal at Colorado-based Minot Capital. 

ReSeed will pay successful candidates a stipend for living expenses, cover the cost of lead generation, and more. It hopes to make revenue through taking fees on LP capital it secures for the operators and asset management fees. 

Announcing the deal on Twitter — which the firm plans to use for connections and further fundraising — co-founder Moses Kagan said he hoped ReSeed would eventually be to real estate what Y Combinator is to tech. 

The firm has already “raised capital sufficient to fund several cohorts’ worth of expenses, deal pursuit costs, general partner co-investments and some limited partnership capital,” Kagan, who runs Los Angeles-based landlord and property manager Adaptive Realty, said in an interview. He declined to provide specifics on how much was raised.  

Going forward, ReSeed will raise LP capital on a “deal-by-deal basis” to invest in any deals brought forward by its operators. It will start with multifamily deals in the $5 million to $20 million range, according to Kagan. 

That target market means ReSeed can’t tap into funds from institutional investors, who focus on bigger-ticket, high-quality assets. 

“There are disproportionate returns available in the sub-institutional market,” Kagan said, “because you are dealing with owners who are often worse operators, hire worse property managers, hire brokers who are lower quality and don’t know how to run a real sale process.”