Rising rents, stagnating wages and student loan debt have made it exceedingly difficult for Americans to get a foot on the property ladder. The path to homeownership can be even more challenging for first-generation homebuyers, individuals with bad credit histories, and communities of color who have historically lacked access to generational wealth-building.
Landis, a rent-to-own platform that aims to “make it easier to buy your dream home,” announced today that it had raised $165 million in debt and Series A funding. The round was led by Sequoia Capital with participation from Arrive, a venture capital firm under rapper Jay-Z’s Roc Nation entertainment label, and Dreamers VC, a venture capital firm co-founded by actor Will Smith and professional soccer player Keisuke Honda.
A number of tech founders joined the roster of celebrity investors, including those from Plaid, Cash App, Ethos, Instacart, Front, Flatiron Health and Tango. This latest round of financing raises Landis’ combined debt and equity to $182 million. The startup’s co-founder, Cyril Berdugo, told TechCrunch that the capital will be used to expand into new markets, hire more employees and enhance user experience.
Landis improves on the traditional rent-to-own model by incorporating financial literacy coaching. The majority of clients are those who do not qualify for a mortgage due to credit or debt, or have not accrued enough savings for a sizeable downpayment. The company uses underwriting technology to project whether a client will be able to qualify for a mortgage within the next two years. If they’re deemed a good fit, the client is given a budget to shop for a home, which Landis purchases on their behalf.
“We understand that people can fall on tough times, but no one should be locked out of homeownership forever,” said Landis co-founder Tom Petit in a press release. “Whatever their situation, we give our clients easy, achievable steps to become eligible for a mortgage. Getting ready for a mortgage is often a stressful and difficult process. Landis makes it easy, fun and approachable.”
Landis takes care of many crucial steps in the home buying process, like connecting the client with a real estate agent, finding an appraiser and home inspector, and completing mountains of paperwork. After closing, the client rents the home from Landis for a period of up to two years while working with a coach to reach their financial goals, like improving their credit score or creating a savings plan. Closing costs are even included in the downpayment fund, ensuring a smooth transition from renting to owning.
The company currently operates in 11 states and 29 cities and hopes to expand its network to 20 states by 2022. Landis targets markets where rents tend to be higher than typical mortgage payments. They’ve also made their homeownership coaching app available for free on the App Store for iPhone users.
“We are proud to have invested in Landis,” said Will Smith, co-founder of Dreamers VC, in a statement. “Landis is an innovative company that also has a social mission we are aligned with. We are excited to be part of a journey that helps Americans achieve homeownership through financial education.”