This week it’s been announced that Jay-Z and Will Smith are both backing a startup that aims to help low-income renters finally make their dreams of homeownership a reality.
According to Bloomberg, Jay-Z’s Roc Nation and Smith’s Dreamers VC recently invested in Landis Technologies, which was founded by Cyril Berdugo and Tom Petit and caters to would-be homeowners who currently can’t afford to buy.
First, the company purchases the houses and then they rent them to their clients until they can qualify for a mortgage. To assure transparency, clients are assured that they can buy the property back at a predetermined price up to two years after the initial acquisition.
This rent-to-own approach has already proven successful for other companies but as part of its service, Landis also provides client coaching and supplemental support on things like financial management, credit score improvement, and tips on how to save up for a down payment.
“Financial inclusion is really important to us,” said Berdugo. “An aspect of Landis that we’re very proud to be a part of is wealth creation for low-income Americans.”
“The company’s typical client is a first-time homebuyer with a budget between $110,000 and $400,000,” reports Bloomberg.
Jay-Z and Will Smith’s camps backed the firm in a $165M round of funding which they estimate is enough to acquire approximately 1,000 homes in that range.
Although Landis is based in New York, it also operates in 10 other states including Alabama, Kentucky, and South Carolina. The company designates rent that is equivalent to its carrying costs on the home with the addition of a fee “on top of the value of the property at the time of its initial purchase.”
If a client isn’t prepared to purchase the home within the two-year deadline, Landis has the option to give them a grace period or sell the property.
“We make money when our client buys the house back,” said Berdugo. “If we leave money on the table, that’s our problem.”
Although property prices are soaring in the wake of the COVID-19 pandemic and making ownership even less attainable for many Americans, Landis is still hoping to turn 80% of its clients from renters to buyers.
As theGrio previously reported, this week California U.S. Rep. Maxine Waters has introduced a bill to renew the eviction moratorium put into place at the height of the coronavirus pandemic to protect renters who may still owe back rent.
President Joe Biden has signaled that he is supportive of extending the bill; however, there could still be challenges for it to pass the House and Senate, and recent rulings by the conservative-leaning Supreme Court have not been in its favor.
One ruling prevents the Centers for Disease Control and Prevention (CDC) from extending the moratorium, which will now require an act of Congress.
Waters, who is chair of the House Financial Services Committee, released a statement accompanying her new legislation, the Protecting Renters from Evictions Act of 2021, saying, “The current eviction moratorium expires in two days, on July 31, putting millions of people at great risk of eviction and homelessness.
In one of the wealthiest countries in the world, this is unacceptable. Even before the pandemic, more than 580,000 people are experiencing homelessness on any given night, and 10.5 million households were paying more than 50 percent of their income on rent.”
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