After Cyril Berdugo’s grandparents emigrated from Morocco to France, his father grew up in low-income housing and relied on government subsidies to maintain a roof over his head.
Through his family’s story, Berdugo says he developed a desire to help people achieve the American dream of homeownership.
Today, Berdugo is a co-founder of Landis, a company he says exists to help renters become homeowners. To further that goal, it plans to purchase 400 to 500 houses in the greater Chattanooga area within the next four to five months.
“We buy nice houses for people to rent, and then they buy them from us at a later date,” he says via Zoom from his office in New York City.
Although Berdugo has condensed the service Landis provides to an elevator pitch, he insists it really is that simple.
“We transition renters to homeowners,” he reiterates. “We do it because we believe homeownership is important for financial stability in America.”
Although Berdugo is sitting at his desk, he appears to be speaking from within a picture-perfect suburban scene, courtesy of a Zoom-generated backdrop. Behind him, a row of immaculate houses and well manicured lawns looks almost too good to be true.
But for one Landis client, this place is actually home. “We bought the house in the middle for one of our clients in Charlotte, North Carolina,” he says, leaning to his left so the residence is fully visible.
A client of Landis begins as someone who’s unable to buy a house as nice as the one behind Berdugo – or any other house, for that matter – due to credit issues, lack of money for a down payment or a debt-to-income (DTI) ratio that would make most underwriters choke on their coffee.
Although the client might not be mortgage-ready, Landis’ underwriting algorithm can determine whether the client might qualify for a mortgage within the next 12 to 24 months, Berdugo claims. If the computer spits out a thumbs-up, Landis gives them a budget for a property, which the company then purchases.
At that point, the client moves into the home as a renter and is assigned a Landis coach, who helps the client overcome obstacles to homeownership. As soon as the client is ready for a house payment, they buy the house from Landis and transition from paying rent to paying their mortgage.
“Homeowners build wealth; renters generally don’t,” Berdugo says. “So, our passion is working with clients who are trying to achieve homeownership but can’t.”
The Landis model does have restrictions. For starters, the company will only purchase single-family homes priced between $110,000 and $400,000. Also, a renter’s typical deadline for purchasing a house is either 12 or 24 months, although Berdugo says the company is flexible on this point.
“We’ll work with clients who need more time. This came up last year, when so many people lost their jobs.”
In addition, clients must have a minimum credit score of 550, $30,000 in annual income and $3,000 in savings, Berdugo notes.
While Landis’ primary objective involves turning renters into buyers, the company also has a side quest: Ensuring the purchase of a home saves the buyer money.
Berdugo says Landis makes this possible at two points along the homebuying continuum. First, the cost of rent matches the company’s cost of carrying the home, and second, Landis sets the price of its houses at 3% more than their original price.
“Property values in Chattanooga have gone up 10-15% in the last year, so when someone buys a house for $200,000, a year later, it’s worth $230,000. But at 3% higher, our clients buy their house back at $206,000, saving $24,000.”
The coaching Landis provides is designed to make sure clients are able to purchase their house at the end of their rental period, Berdugo adds.
“Financial inclusion and financial literacy are at the core of everything that’s important in America. A lot of people don’t know how to improve their credit score, or don’t know the difference between the different kinds of mortgages. That’s where we step in.”
Landis funnels its educational component through an app currently available on iPhone. The app provides users with a dashboard view of their credit, down payment savings and debt, alongside the specific goals they need to reach to obtain a mortgage.
The app also suggests actions users can take to move toward homeownership.
“We create content that’s tailored to each client’s needs. If someone needs to improve their credit, then we’ll focus on that; if someone needs to solve their debt-to-income ratio, then we’ll give them materials that will help them reach mortgage eligibility,” Berdugo says.
To bankroll their ambitions, Berdugo and Landis co-founder Tom Petit recently closed $165 million in debt and Series A equity financing, bringing Landis’ total debt and equity raised to $182 million since the company’s launch in 2018.
Led by Sequoia Capital, the Series A round included participation from actor Will Smith’s Dreamers VC.
Berdugo and Petit also are introducing their brainchild to more cities, with the latest count standing at 47 municipalities in 11 states, including Alabama, Georgia, Indiana, Kentucky, Maryland, North Carolina, Ohio, Pennsylvania, South Carolina, Tennessee and West Virginia.
To help propel this expansion, Landis has become a member of the National Association of Realtors’ REACH program, a homeownership growth accelerator.
The Tennessee cities in which Landis is active includes Chattanooga. Although Berdugo declines to reveal the number of Scenic City clients Landis has served, he does say the company plans to purchase between 400 and 500 houses in the greater Chattanooga area within the next four to five months.
Although Greater Chattanooga Realtors president Robert Backer says this number “seems aggressive” given the tight inventory in the local housing market, Berdugo says Landis has a plan in place for purchasing the properties that includes forming partnerships with homebuilders.
Berdugo says Landis also is working with managing brokers in Chattanooga to introduce the company to their agents, who can then send clients who are not mortgage-ready to Landis.
When the company buys a house for the client to rent, the real estate agent receives their full commission, according to Berdugo.
“These partnerships will not only help real estate professionals grow their businesses but also enable more Americans reach homeownership. It’s a win-win.”
Learn more about Landis at Landis.com.