Homeownership is one of the key components to building intergenerational wealth, and Landis is working to make that a reality for renters.
U.S. homeownership rates in 2020 were about 65.8% according to Statista. The rate reached its peak of 69.2% in 2004 before falling sharply due to the economic recession of 2007-2009. The rate reached 63.7% in 2016 before steadily going back up.
To continue with its mission, Landis raised $165 million in a combination of debt and Series A equity funding. Sequoia Capital led the round and was joined by Jay-Z’s Roc Nation venture investment arm Arrive, Will Smith’s Dreamers VC and existing investor Signia Venture Partners. A group of founders also invested in the company, including those from Plaid, Cash App, Ethos, Instacart, Front, Flatiron Health and Tango. This latest funding brings Landis’ total debt and equity raised to date to $182 million.
“Landis helps families take their very first steps toward homeownership,” Roelof Botha, partner at Sequoia, said in a written statement. “By focusing on financial literacy and individualized coaching, we are giving everyone the opportunity to own their home, increasing financial inclusion and equality in America. Our technology is particularly relevant to those with low-to-moderate income who have been neglected by traditional financial solutions.”
Cyril Berdugo and Tom Petit founded Landis in 2018 and told TechCrunch that the idea for the company came after witnessing renters losing money, by, for example, paying $1,700 per month to live in a home where, based on its value, a mortgage would be $1,000 per month.
The New York-based fintech company receives referrals from real estate agents and mortgage lenders to work with prospective homeowners, who are typically unable to qualify for a mortgage due to poor credit, lack of down payment savings or debt.
It uses its underwriting technology to determine if the client will be able to afford a mortgage in the next 12 to 24 months. If so, Landis gives the client a budget to pick a property, and will purchase the home and rent it to the client, who will then work toward saving money and building a stronger financial footing to get to mortgage-readiness.
Berdugo and Petit don’t see their relationship with renters as a typical landlord-renter one, but instead as a partnership. Clients have also taught the pair that school districts matter in where they purchase a home and setting their children up for equal success is important.
“Our clients are more motivated than typical renters and really want to hang on, improve their savings, and it is working,” Petit said. “They are so much more successful. We also feel it when they call and ask for advice and even try to beat their deadlines.”
Berdugo did not disclose the round’s debt versus equity breakdown, or go into specifics about growth metrics, but did say the driver for the funding round was to expand into new states, add to Landis’ headcount and improve user experience.
The company is already operating in 29 cities in 11 states and plans to increase that to 20 states by next year. Berdugo and Petit target states where the impact will be greatest, like where rents are higher than they should be.
In addition to the funding announcement, Landis said it opened up access to its Landis Homeownership Coach mobile app for free to everyone with an iPhone. The app provides a dashboard view of credit, down payment savings and debt, with insights and actions for clients toward reaching their goal of qualifying for a mortgage.
“Inequality to financial literacy and financial services are related,” Berdugo said. “People with low-to-moderate income don’t have access to services that wealthier people have, and we are trying to bridge that gap by providing financial literacy and services to get them mortgage ready.”