As one of the most recent additions to Landed’s team, I have spent quite a bit of time talking with friends and family (and a very kind stranger who sat next to me on a plane) about my new job. Some seem to get it; some seem confused and can’t quite understand what Landed is all about. I’ve heard questions ranging from, “So, you’ll give me a loan for my down payment?” to “Wait, are you using government money for teacher houses instead of teacher salaries?” to “Cool! So you all are going to fix all of the housing problems for teachers, right?” More often than not, I think that people have a hard time understanding Landed because the company doesn’t fit squarely into any of the boxes we commonly associate with homeownership: Landed is part education start-up, part real estate brokerage, part impact investor. On a Venn diagram of those three industries, I doubt that there are very many companies that would fit in the central overlapping space (besides Landed, of course).
In my most recent conversations, I’ve learned that it’s almost easier to define Landed by what it is not in order to create space for people to accept that Landed is an out-of-the-box solution to an incredibly complex and pressing problem. And so, today I will be dispelling the top 10 misconceptions I’ve encountered about Landed in the hopes to better introduce you to the heart of what Landed actually is.
1. Landed is not the silver bullet that will fix the housing crisis.
The housing crisis is an incredibly complex issue that involves housing supply, employment opportunities, regional salaries, zoning laws, property taxes, public sentiment, natural geographic boundaries… I could go on, but suffice it to say that the housing crisis is even more complicated than my former students’ love lives (middle school teachers out there, you know what I’m talking about).
In the face of all that, a little more down payment money is not going to solve everything, but we do think that we can make a difference for some of the people who need it the most.
To find out more about Landed’s perspective on the housing crisis, read Jonathan Asmis’ piece on The Simplest Way to Think about the Housing Crisis or Jesse Vaughan’s blog post about Why We Support More Housing Supply.
2. Landed is not giving out free money.
We’d all love a fairy godmother to grant us free cash for our down payment (me included). Unfortunately, Landed is not in the fairy godmother business for one major reason: unlike this mythical benefactor who can grant infinite magic wishes, Landed’s pot of down payment dollars is finite. If Landed were to give out free money, we’d be able to help a few homebuyers, but eventually our pool of money would run dry. We don’t want to give away money until it’s gone; we want to create a process by which money generates more and more possibilities. We want ALL educators, now and in the future, to be able to access homes in the communities where they work, and that mission requires a sustainable market solution.
That’s why Landed is designed so that today’s homebuyers can be tomorrow’s homebuyers’ fairy godmothers. By working with Landed, homebuyers agree to share some of the profit on their home with Landed's investment fund in the future. Money returned to that fund is then recycled to help a new educator purchase their home (see point #3 for more on this model). Each homebuyer who uses Landed today will help to create a bigger pot of down payment funds for future educators to buy their homes.
So no, Landed is not your fairy godmother. But by working with Landed, homebuyers have the opportunity pay it forward and help build a virtuous and renewable cycle of homeownership that will span generations.
3. Landed is not a clever way for Landed’s staff to get rich off the profits from your home.
Landed is comprised of two different entities: the Landed Fund and Landed, Inc.
The Landed Fund invests money from organizations such the Chan Zuckerberg Initiative (CZI) and Zoma Capital. These organizations provide capital to the Landed Fund with the sole purpose of investing in the homes of Landed customers. As philanthropic partners interested in sustainable solutions for educator housing, Zoma Capital and CZI have chosen to recycle the gains from their investments toward the same mission. This means that whatever profit homeowners return to Landed will flow back to the Landed Fund to be reinvested alongside the next homebuyer.
Landed, Inc. is a separate company from the Landed Fund. Landed, Inc. employs our staff, rents our office space, pays our internet bill, etc. Landed, Inc. primarily makes money from real estate agents (i.e. not from investments).
We’ve thought long and hard about how to build the most financially responsible and sustainable model. You can read more about how we developed our equity sharing product by reading Jonathan Asmis’ piece, Is Landed Down Payment Assistance Fair?
4. Landed is not a lender.
Characteristics of a typical loan
- A promise to pay back the entire principal amount borrowed.
- A predetermined end date by which the principal must be repaid (aka 15 years).
- An interest rate that accrues on the principal over time.
- Monthly (or regular) payments.
Characteristics of Landed down payment support
- No promise to repay the entire original investment. Instead, you’ll pay back Landed’s initial investment plus or minus a portion of the home’s change in value at the time the partnership ends – the exact amount will depend on what’s going on in the housing market when you choose to buy out Landed.
- No predetermined end date. You can choose when to end the partnership – anytime up to 30 years.
- No accrued interest on the original investment.
- No monthly (or regular) payments.
If Landed isn’t a lender, then what is it? So glad you asked… Landed is a shared-equity partner. We invest alongside homebuyers; what’s good for you is good for us. If you profit off your home, the Landed Fund benefits alongside you (and ultimately, future educators will benefit). If you lose money on your home, the Landed Fund takes the hit alongside you (something your lender would NEVER do).
If you use Landed’s down payment program, you’ll still need to work with a lender and take out a mortgage. In most Landed transactions, homebuyers contribute 10% of the home’s value, Landed contributes another 10% of the home’s value, and the lender provides the remaining 80% of the home’s value.
Equity investments are a very common financing tool for corporations but new to individuals; for the most part, our parents and their parents all bought their homes with only debt. We realize that it can be scary to try something new, so Landed works hard to make sure that our customers understand all of the nuances (and perks!) of working with an equity partner.
5. Landed is not the right solution for everyone.
When I was a special education teacher, I differentiated lesson plans daily by changing font sizes, adding visuals, including scaffolded questions, using tactile aids… Each student was a different learner and they each needed different interventions.
I think most educators would agree that teaching is not a “one-size-fits-all” sort of business. Neither is homeownership.
You can think of Landed as a differentiated pathway to homeownership: There are many different ways to become a homeowner and Landed is one alternative to the current suite of options. In particular, we think that Landed works best for public educators and school employees who earn just enough to not qualify for affordable housing opportunities (which are often restricted to people who qualify as low to moderate income), but not enough to compete with professionals whose salaries are significantly higher. To date, most of Landed’s customers fit squarely in this “missing middle” category.
Along with this point, it should be noted that Landed is not a substitute for government affordable housing programs. Instead, Landed is just another tool in the toolbox for people struggling to access homeownership. To learn more about other tools in the homebuying toolbox, check out Emily Eshman’s blog post Finding the Right Fit: An Overview of Common Homeownership Assistance Programs.
6. Landed is not a substitute for paying teachers more.
As a former public school teacher, I know exactly what educators make. I also know how hard teachers work. And I know that the work, while immeasurably gratifying, is nowhere close to commensurate with the pay. If it were all about money, I doubt that anyone would be a teacher.
Landed’s down payment program is by no means a benefit that will level the playing field between educators and other professionals, but is rather a drop in the proverbial bucket of society’s debt to our educators. Landed is working hard to uphold those who uphold us, but we know that upholding our educators will require a far more expansive and holistic social reckoning to afford our teachers the respect they deserve.
To read more about Landed’s perspective on teacher pay, check out our guest blog post on Why Raising Teacher Pay Matters and Jess Zhao’s piece, Simple Math: Why Teacher Homeownership is Essential to Improving Schools.
7. Landed is not only for first-time homebuyers.
Already own a home? Not a problem! Landed will happily work with any eligible educator, regardless of their current housing status.
If you’re interested in selling your current property and buying a new property with Landed's program, Landed is happy to match you with one of our fantastic partner real estate agents who can both list your current property and help you buy a new home.
If you would like to keep your current home as an investment property and purchase a new property for your primary residence using Landed's program, that’s also fine!
First-time homebuyers and experienced homebuyers alike find value in Landed’s partnership during the homebuying process.
8. Landed is not exclusively for traditional, classroom teachers.
Landed believes that education doesn’t happen just in the classroom; it also happens in the hallways, in the cafeteria, in the gym, in the guidance counselor’s office, in the bandroom... Schools are like a village: there are many different people playing many different roles and it takes each and every one of them to build a healthy environment for our students.
Landed’s mission is to uphold those who uphold us, and that means upholding each and every person pulling their weight to educate America’s future. All educators and school employees who have worked for a minimum of two years at least part-time in a partner public school, college, university, or charter school are eligible to use Landed’s down payment program. This includes classroom teachers, coaches, interventionists, speech-language pathologists, psychologists, nurses, administrators, social workers, occupational therapists, department chairs, security guards, physical therapists, janitors, principals, and the many more valuable professionals working tirelessly to make a difference in students’ lives everyday.
9. Landed is not your landlord.
Toilet clogged? Roof leaking? Faucet dripping? Ugh, we feel you... Such a bummer! We’re definitely there with you in spirit but unfortunately, we can’t provide a plunger, a roofer, a plumber, or a check to sponsor any of the repairs. Landed is not set up to provide additional financial assistance beyond down payment support. All maintenance is the sole responsibility of the homebuyer. Going from a renter to an owner can definitely be an abrupt transition, so make sure you’re prepared for the adventure of homeownership before diving into the process.
On the flip side, being your own landlord can also be a huge perk because it means you're completely in control of your own home. You call all the shots, so paint the shutters your favorite shade of green, renovate that bathroom in an art deco theme, add in a backyard garden bed for your summer herbs – your house, your rules!
10. Landed is not done.
As of April 2018, Landed has...
- Helped 53 educators purchase homes.
- Partnered with 50 school districts across California and Colorado, making 50,000 educators eligible for Landed’s down payment program.
- Invested in more than $26M of residential real estate property.
We are incredibly proud of how far we’ve come, but we’re not even close to slowing down. We have our sights set on launching in every high-cost city across the country and ultimately improving access to wealth-building tools for essential professionals near and far. This includes new efforts by our team to create resources for educators who are not ready to use Landed’s program today; stay tuned in to the Landed blog to learn more about Landed’s Upholder efforts, coming soon!
If you’re an educator struggling to access homeownership in expensive areas, but do not live in California or Colorado, be sure to sign-up on our website – we’ll keep you up to date and let you know when we’re ready to launch in your area! If you’re an educator or school employee in the San Francisco Bay Area, Los Angeles, San Diego, Denver, Hawaii, Portland, or Seattle, it would be our pleasure to work with you to find your next home – sign up on our website today to find out if you’re eligible. We look forward to partnering with new educators, school districts, banks, foundations, and realtors to create long-term homeownership investments in our communities for the sake of America’s students.