SAN FRANCISCO, CA, Landed, which helps teachers secure down payments for their homes, has raised $5 million in funding.
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According to Techcrunch, the $45 billion Chan Zuckerberg Initiative is putting $5 million into a fund for Landed, a Y Combinator startup that offers to pay up to half of the 20% home down payment for educators with zero interest or monthly payments. Instead, Landed recoups its investment when the home is sold or refinanced, assuming up to 25% of the appreciation or depreciation of the home's value.
Any money earned from the upside on the Landed's investment will be put back into the CZI fund to make it sustainable and fund down payments for more educators. Meanwhile, Landed makes its money by taking a cut of the standard referral fee earned by real estate agents that it connects to the educators buying homes, who don't pay any extra to use Landed.
The goal is to allow more educators, administrators, janitors, and more to live near their jobs at Redwood City, Ravenswood City, and Sequoia Union high schools, where Silicon Valley's tech boom has made home prices otherwise out of reach of these critical community members. CZI posted on Facebook that "More broadly, our hope is that our partnership with Landed will help create a sustainable model to help make homeownership a reality for more educators and others at risk of getting priced out of the communities they serve."
Landed CEO Jonathan Asmis writes that "While making housing more accessible will require many approaches, we hope this kind of down payment support will help to make it a little easier for great educators to stay and build successful careers in the region."
CZI has mostly focused its donations and investments on health science and education, like its $3 billion BioHub initiative to end disease. But it's also funding programs for the underprivileged. Earlier this year it gave $3.1 million to East Palo Alto's Community Legal Services, which offers legal assistance such as fighting landlords to families suffering from the local house crisis. CZI also gave $500,000 to UC Berkeley's Terner Center for Housing Innovation, that seeks to generate long-term solutions to Bay Area housing shortage.
They're paired with a local lender who can determine if they qualify for the necessary mortgage, and then connected to a real estate agent who finds them the right home. The buyer must put up at least 50% of the down payment, and Landed pays the rest in exchange for an equity stake in the home.
There are no interest rates or monthly payments for the Landed contribution, just the mortgage. Years later when the buyer refinances to buy out Landed's stake or when they sell their home, its value is appraised. If it's gone up, Landed shares in up to 25% of the upside, while if it's gone down, it shoulders up to 25% of the burden. CZI's Landed fund will soak up both, and reinvest proceeds in other down payments.
Asmis tells TechCrunch that stable housing for teachers can have a big positive impact on the educational outcomes for kids. "The amount of money and resources and time that school districts and schools have to put into constantly hiring and rehiring staff, because they're coming for a few years and then leaving because housing is too expensive, could be spent elsewhere."
Teachers have it tough enough already. They show up to work earlier than most of us, and have to be on point managing children all day instead of spacing out in front of a computer. The closer they live to their school, the more time and energy they have for inspiring kids.
The hope is that since home values trend upward over time, educators will have enough from their Landed deal's upside to buy their next home unassisted. Asmis says Landed is "a stair-step to ownership."