Nathaniel and Greg, do you see any reasons why the use of Traditional Search Fund Model powered by units could not be leveraged for Real Estate Development?

Hi Elliot. I am not a deeply knowledgeable on real estate. Greg might know better.



Does the following roughly reflect your idea?:

A young real estate developer raises working capital from a group of investors to get a parcel under LOI and develop a proposal with high ROI. The investors then get proprietary access to back the project and a stepped up basis on the working capital.

This strikes me as reasonable. I would check for the following potential issues.

On searcher side: Is the working capital really necessary? How do people traditionally get their start in development? Is it fairly cheap to get in the game? My sense is that in real estate development a lot of people are able to get started on small projects with limited working capital.

On seller/vendor side: How willing are sellers/brokers/engineers etc. to work with someone with limited experience/committed capital?

On investor side: Do they get proprietary access or pricing? Perhaps young developers are willing to give more favorable terms to investors in return for their hands-on guidance and mentorship.

Hey Elliot - I'm not an investor, but one issue with using a traditional search fund for real estate development could be that traditional search investors aren't looking to invest in real estate, rather in businesses. On the flip side, non-traditional search investors likely won't be familiar with the model. So they might be uncomfortable not only with investing in someone without real estate development experience but also in an unfamiliar syndication model.