Struggling to get your finances in order to buy a home? This startup says it will help

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A startup looking to turn tenants into homeowners has just raised $ 165 million in venture capital. In NYC Landis says he will use the cash injections to expand his own-deductible lease program for first-time home buyers

For would-be homeowners, Landis plays many roles. He teaches them to improve their credit ratings. He oversees the bank accounts in which they accumulate their initial payments. And the startup buys houses and then acts as a landlord while its clients get their finances in order.

“Our goal is to move as many tenants into home ownership as possible,” says Cyril Berdugo, co-founder of the company.

Landis announced today that it has raised money from a group of investors led by Sequoia Capital, a Silicon Valley venture capital firm. Other sponsors include actor Will Smith and Jay-Z’s Roc Nation. Earlier this year, the VC fund from the National Association of Realtors announced funding for Landis. And in another endorsement, the nonprofit National Community Reinvestment Coalition praised Landis’ proposal as a way to close persistent racial divide in home ownership and wealth.

Maintaining a well-known name could ease some of the doubts associated with lease with purchase concept. Some bad actors have earned a dubious reputation for defrauding buyers but never delivering a home.

Landis says it’s dedicated to helping tenants achieve their goal of owning a property. “We agree with them,” says Berdugo. “We want them to buy a house as early as possible.”

Heather Torres, a North Carolina client for Landis, says she used the company to buy a home in High Point. During her time with Landis Torres, she raised her credit rating from 560 to 780.

“I hadn’t had credit cards for 10 to 12 years, so I had to increase my credit rating and budget accordingly,” says Torres. “Landis walked me through the entire process by creating a personalized financial plan.”

How it works

Landis currently offers its rent-to-buy model in 11 states: Alabama, Georgia, Indiana, Kentucky, North Carolina, Maryland, Ohio, South Carolina, Pennsylvania, Tennessee and West Virginia.

If you are a renter in one of these states, you can apply on the Landis website. He is looking for consumers with a dubious credit history and little cash, but also with the potential to become creditworthy with a little work.

Once you get approved, you will find the home you want. Landis buys the house and then rents it to you at the current rental rate.

Landis’s plan is for you to qualify for a mortgage within two years. Landis works with its clients to improve credit scores and increase downstream payments.

When you’re ready, you buy the house from Landis for 3 percent more than he paid on your behalf, so if Landis bought the property for $ 250,000, you would pay $ 257,500.

Berdugo says Landis’ business model is not built on increasing the cost of housing, but on the transfer of tenants into ownership. Since house prices rose by 10-15 percent last year, many of the company’s borrowers are seeing prices rise at the expense of their budgets.

“We leave money on the table,” says Berdugo. “Our clients buy their home back with a 3 percent mark-up, so we leave 7-12 percent on the table. It suits us. “

What can you do

If you are not buying a home in one of the 11 states where Landis operates, you can still prepare to buy a home. Four key steps:

  • Improve your credit score… This is the most important factor in determining if you are eligible for a home loan and how much your mortgage is worth. The best deals go to borrowers with a credit rating of 740 or higher, but you can still get a loan with a lower rating.
  • Increase your down payment… In today’s market of sellers money is king… This means that buyers who have little money for a down payment are at a disadvantage. With rents skyrocketing, collecting cash is challenging. However, try to find ways to increase your savings.
  • Research lending programs… Some mortgage programs allow you to invest as little as 3 percent. FHA loans require just 3.5 percent and are available to borrowers with a credit rating of 600 units. And loans from the Department of Veterans Affairs are available with no repayment and no credit rating requirements. One caveat: these programs are more expensive.
  • Explore programs for first-time buyers… Many states, cities and employers offer grants and low-interest loans to help home buyers overcome down payment barriers. These programs usually require you to complete credit counseling and a basic education for home buyers.

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