Another Drexel University alumnus is launching a tech-based startup in Philadelphia.
Multifamily real estate investment platform YieldEasy, co-founded by Drexel grad Jeff Gopshtein, will open its brokerage next month.
YieldEasy is an online brokerage focused on small multifamily properties ranging from duplexes to 20-unit buildings.
The marketplace will let users upload their properties for sale and will also pull small multifamily listings from a multiple listing service, which provides data to sites like Zillow and Realtor.com. The company charges 1.5% commission when the property sells to buyers verified on the site, and it refers users to financing, property management and title partners.
“We didn't invent this segment,” Gopshtein said. “We're basically just building a better mousetrap.”
YieldEasy will launch in Philadelphia, Austin and Miami next month, with plans to expand to cities like Boston.
The startup is looking to raise a seed round of $750,000 to $1 million in the next three to six months to hire employees in product development, technology and software development and “beef up” the platform. The startup has already raised $100,000 from mostly family and friends, Gopshtein said.
YieldEasy joins the spate of Philadelphia companies founded by former Drexel students in the last few years. Fintech Wolf Financial, delivery startup Lula and sports betting platform Sporttrade were all launched in the last three years. Philadelphia-based unicorn Gopuff has been on a fundraising streak, securing more than $2 billion in growth capital this year.
Gopshtein spent years in the local real estate industry, with stints at Cross Properties, Odin Properties, The Galman Group, Tester Construction Group and Scope. Working for commercial real estate firms made him wonder how their success could be replicated for entrepreneurs.
He started buying single-family homes to rent, but maintaining a single-family house and keeping tenants there was inefficient, he said. He pivoted to seeking out deals on duplexes, triplexes and five-unit properties, but finding a small apartment building to buy was difficult with no central marketplace for those property types.
Large real estate firms typically don’t deal with small multifamily properties, and residential Realtors tasked with selling investment properties don’t have the same tools and resources that they would for selling a single-family home, Gopshtein said.
“These small deals become the crumbs and nobody wants to touch them,” he said.
High commission rates can also shut out potential real estate investors. Realtors will typically have a 5% to 7% commission rate on smaller multifamily properties, which could come out to tens of thousands of dollars during a transaction.
The biggest barrier to entry when it comes to real estate investment is capital, he said, and mom-and-pop and younger investors starting from scratch don’t have access to that asset class.
“We really do think that our small multifamily is how you build generational wealth, and we want to create a seamless way for people to do that,” Gopshtein said.
YieldEasy doesn’t offer fractional shares of apartment buildings, but Gopshtein wants the company to eventually offer fractional ownership. There are regulatory hurdles to that structure, and YieldEasy would need a large line of credit to be able to buy properties and offer fractional ownership, he said. The startup would likely partner with a property company that already owns those assets, with YieldEasy facilitating transactions, he said.
The startup is designed to be a central marketplace for both first-time buyers and longtime portfolio investors.
“We want to be the first name that people think of when they say, 'Hey, I want to buy my first duplex,' 'I want to buy my first quad,' 'I want to buy my first six-unit building,'” Gopshtein said. “These are buildings that are scattered all throughout the country, but how are you going to find it? And for us, we really want to open that up to the smaller end user.”
