Jay Z & Will Smith recently invested in a startup to help low-income Americans become homeowners, Bloomberg reports.
Landis Technologies is a startup aimed at helping renters build credit until they can buy a home. Recently, the company raised $165 million from a group of investors that included Jay Z’s Roc Nation and Will Smith Dreamers VC.
The company was founded by Cyril Berdugo and Tom Petit who are focused on helping prospective homeowners who currently can’t afford to buy. The company would purchase the home, renting it to the client until they can qualify for a mortgage, the renter being given the opportunity to buy the home back at a predetermined price for up to two years after the initial acquisition.
The concept is an innovative flip on the rent-to-own model that has been floating around for some years. Landis also provides wrap around services for their clients including financial coaching and credit repair help while they save for a down payment.
“Financial inclusion is really important to us. An aspect of Landis that we’re very proud to be a part of is wealth creation for low-income Americans,” said Berdugo.
The company currently operates in 11 states including Alabama, Georgia, Indiana, Kentucky, North Carolina, Maryland, Ohio, South Carolina, Pennsylvania, Tennessee and West Virginia. This most recent round of $165 million in funding includes debt and equity, positioning the company to acquire nearly 1,000 homes. The goal is to convert about 80% of their clients from renters to buyers, a rate that would be much higher than any other rent-to-own company in the U.S.
The rent is set at an equivalent to the carrying costs on the home and Landis also charges a fee on top of the value of the property during the initial purchase. If for whatever reason the client isn’t able to buy the home after two years, Landis will offer them more time or sell the property.
“We make money when our client buys the house back. If we leave money on the table, that’s our problem,” Berdugo explained.
Having the backing of celebrity investors like Smith & Jay-Z lends a particular type of credibility to the lofty endeavor and brings it the much needed visibility to recruit potential homebuyers into the program.
This article was originally posted on BOTWC