HIBT Lab! Landed: Alex Lofton

Welcome to How I Built This Lab. I'm Guy Roz. So there are lots of people who want to buy a home and who can afford to pay the mortgage. The problem. is the down payment. In most cases, You need to have 20% of the purchase price in cash before a bank will lend you the money for the mortgage. Well, this is a huge problem for millions of people, especially people who can't go to mom or dad, or who don't have intergenerational wealth.

And in many of those cases, that means people who are not white. Or people who have solid middle class jobs, like nurses or teachers, or emergency workers and firefighters, many of them can't afford to buy homes in the cities where they work. So Alex Loften, my guest today, is trying to help fix that. In 2015, Alex and two friends launched Landed. It's a company that helps people who do essential work.

Buy homes by helping them with the down payment. In exchange for providing the cash for the down payment, Landed gets an equity stake in the home. And when it eventually sells or the owner refinances the mortgage, Landed's investors get a share of the appreciation.

Today, Landon has helped over a thousand essential workers buy a home in more than 30 states across the country, and long before starting this company. Alex watched firsthand as his parents, two public sector workers in Bellevue, Washington, struggled. Pay the bills. I would say like eighty percent of the reason my parents would fight would be over money. Um it would be about the month to month just making the next bill. How is that gonna happen? What were we gonna what were we not gonna do

You know, and I I didn't really quite understand'cause I would go If we went to a toy store You know, I would I would just tell my mom, I want this toy. She said we couldn't afford it. And I would just say, Well, just pull out your checkbook. Just write a check. Yeah. You know? That's that's that's where it comes from. And I did no idea. No concept that a check had to be related to something in a bank account that was out of this world to me. So I think as I got older, I appreciated how relative to the entire world how lucky we were

Um and how oh actually not poor we were, but when you're around a bunch of babies of Microsoft Multi millionaires. Yeah. Did you guys uh did your parents own A home? They did not own a home until I was twelve, eleven or twelve. My grandmother granny My mom's mom. She was Not only my best friend at the time, but she uh was the first time in our family where someone owned something they could pass along. So when she died,

She passed her home along to my parents. So it's a first example of intergenerational wealth when transferred to to someone. And that was a game changer. So you you went on to um to Northwestern for college. And um you ended up working for Obama's first campaign.

Um which must have been a pretty Amazing experience at at the time. Oh man. It was awesome. My first job out of college is like working for this guy who First of all, my parents thought I was crazy.

I was graduating from a very expensive school. Yeah. And I had to take out debt. And I was choosing to go work for this campaign where I was gonna get paid eight hundred dollars a month. Yeah. My parents were like, Why are you working for this guy no one can pronounce his name? Hillary Clinton is obviously gonna win. Yeah,'cause you start working for him early, like before he was the front runner in two thousand seven. Oh yeah. I jumped on the campaign first as a volunteer. I showed up with my tie on and I I brought in a briefcase and they said, you know, what's your background? Would you what you know, what do you hope to do here? I said I would like a you know, I would like a paid job, preferably in policy and you know, I I prefer a five day a week situation and they said, Well you can Take off that tie, never wear that again, sit in the corner making phone calls for our field department, uh, all hours of the night, if you want to do that.

And you know, didn't sound too glamorous, but I said, Heck, why why not? And I jumped on as a as a volunteer, but I came for What? this guy Barack Obama was saying and the vision for uh the future that I agreed, you know, really resonated with me. And I ended up staying because of the people that were Showing up. Yeah. organizers from labor movements, you had

management consultants, uh, you had top lawyers, you had technologists, you had all these people from all corners of society coming together and saying, I think I have something to contribute here to try to do do a campaign differently. So I think you did s a variety of stints working for Obama for America over a few years. And and and presumably I mean I have to imagine that that early experience, you know, that was that c certainly the first campaign. There was a lot of energy idealism. It was a lot of people. who were committed to social justice work when many of them eventually started social enterprises. Um d do you think that's where

Your energy for what you do now. For sure. I would never trade in that opportunity that I had to work on the Obama campaign for anything. It it really did ground me both in

Understanding the power of having clear set of values that you operate from as an organization. And making sure that that's known and felt across entire

operation in that case in the Obama campaign it was all about respect and power include. You know, no matter what, there's a way in which you can honor what people what their talents and their resources, what they are and what they can bring to the table. And you could find a way to line those up to achieve a good greater outcome if you just it just empower them right. I also learned personally what I'm passionate about, what I'm good at. And what I'm good at is enrolling people. I my dad always said if I had been announced more religious, I definitely would have been a pastor. Um, but given that that wasn't my my path that

You know, Getting people excited, telling a story. having people see themselves in that story and getting them motivated to be a part of it. Uh was what my job was. But I I didn't, you know, this is in hindsight at the time. I was just doing it because I thought Man, this is this is the next thing that needs to happen. And I also never thought a guy that looked like me would ever have a chance of running for president. Tell me w w when you say guy who looks like me, what what do you mean?

Well, I'm a half black guy who grew up with a mom who's white, a dad who's black, but you know, to the outside world I'm a black man in America. Yeah. And I genuinely thought that maybe by the time I'm dead we'd see a president Um, you know, when I'm older, be a black guy. But not in two thousand seven, two thousand eight.

Um, and honestly that was where all the skepticism was coming from. For example, for my own father, a black man who said this is never gonna happen. This is not this is never gonna happen. And so you know, part of my motivation to be a part of that campaign was, Well, you know, I don't know if it's we're gonna win this. I can't predict this. But I know it's worth.

working on and trying. There's there there is a viable path here. It's gonna be a lot of work. Um So it's that kind of one part delusion and one part grounded reality that I think

I learned there that that would that ultimately was successful in the campaign that kinda drove me to to bring that to other other ventures. Yeah. All right, you end up going to do a an MBA.

At Stanford. And One of the beauties of going to business school is that you can often meet other super motivated people who want to start a business. Um and and that's what you did. You met some friends there who you ended up co founding landed with. Before we get to to land it. What was the problem that you landed on, so to speak? What was the problem that you discovered or or thought about that you wanted to try and figure out how you could solve? I remember sitting in this is I think I'm the only person in the world that was inspired in in an intro to finance class. And in this class there

We talked a lot about the concept of diversification. And the power of diversifying where your money is, so that if One investment goes up. uh another one and can go down and you still could be in a good p good place.

Um, and that it was key to how rich people stayed rich. And I just remember sitting there and The fact that no one in my social circles thinks that way. Like

People don't Have enough. stuff, enough money, enough capital to even think about diversifying, most people were just thinking about how the heck am I gonna save enough to ever get a down payment on a home. Right. That's really about the pinnacle of investing is having your own home. And I thought, man, it would be really first of all, crazy that I'm an over educated person and just now thinking about this. Why why haven't I been forced to really learn this earlier on? And and and number two is What if

What if we could bring the tools of high finance and tools of the wealthy to more people. Democratized who has access to build build wealth in the first place. And and just to clarify for a second, I mean

When when you when you're hearing this idea about wealth diversification, you start thinking how can we democratize access to tools that enable people to to you know to build wealth. You're not thinking like, oh, let's do a you know uh an easy trading platform or an easy like index fund or something. You're thinking Property. That's where my head went.

'Cause that's what I knew really well. And honestly, I'm a millennial. A millennial who lived in San Francisco Bay Area. I was like, How the heck am I gonna be able to afford to buy a home at some point? You know, I was it was a selfish motivation too. Just like I w I need a tool that moves me from being a renter to being an owner. The zero or one Yeah, kind of. Dilemma. What's the gradient in between? I will say though, that's where, you know partnering up, meeting other people who have come from a different background was super important. Something I also believe in. And you got if you're gonna build something great, you gotta diversify your team. And my co founder Jonathan

um, came at it from a slightly different angle, but but awakened me to another thing that was going on. uh in our In our economy and our society, which is given how expensive land is and and and becoming, th this is one area that had yet to really leverage technology to disaggregate or disintermediate um investing in something like real estate. That there were a lot of people that would want to invest in real estate. but just can't because of the cost of entry is too big. So what what if you made it easier to access

um investment in one of the biggest ac asset classes in the world and do so in a more cooperative way with the people who want to live in it. So it wasn't just hey, we're gonna buy a property and rent it back out to people that actually you can have occupants be a be a part owner in it. And then that would be a really interesting proposition to big time investors because they're trying to figure out another way. You know, you had Blackstone and others after to the two thousand eight. Financial crisis. Buy up a bunch of properties. Yeah. Uh that used to be for ownership and now are only rental. And that wasn't a world that either Jonathan and I were super excited about. Yeah.

Alright, you guys are at Stanford and this is twenty fifteen and you come up with this concept for landed, which we'll really get into in a moment. But Essentially. At that time, and even it's even more so today, For the average person in America to buy e a piece of property, a house in the Bay Area was out of reach. I mean I think today

You need a million dollars at least. Mm. almost still impossible to find a home for a million dollars in you know Metro San Francisco area and San Jose area. It's crazy. Um Which means that you can't have a normal functioning city.

When a huge number of people can't afford to live there because You need a city with Nurses and construction workers and you know, and firefighters and cops and

People who Good salaries. Uh plumbers, electricians. I mean cities can't function. without these people.

And they can't afford to buy houses in markets like Seattle or s or the the Bay Area or New York or you know, LA or et cetera. Yeah, that's right. I mean good salaries, a lot of these folks um have pensions, right? They actually have they they're they they have some mechanism where they're starting to build wealth, but but they're not paid enough to put money into retirement, pay the cost of living.

for wherever they live and and save for a down payment. And you know These are people who can't just pick up their laptop and go work Remotely. You you gotta be present for them. When the story that really struck me is that There is a um a teacher in the south bay of the Bay Area who

would drive two and a half hours each way. to get to work. Sometimes we decide just to sleep in their car. Because they didn't want to drive back. There's the emotional part of me that says, Oh, that just feels wrong. Right. I don't want that to exist. But honestly the The math side of me, the this was like this equation doesn't add up.

If this keeps happening, no one's gonna w be able to or work in these positions. And if they don't work in these positions, Who's there to teach your kids and who wants to live in a place where there aren't teachers, right? And so I I think about this as an infrastructure challenge. How do you make sure that you have the people that you need to build the cities and the societies that you want to build and support them, you know, uphold them because they're upholding all of us every single day. They're doing all this stuff that we overdepend on every single day. Why aren't we actually upholding them? And there seems to be a way in which we just think more creatively about the financial tools that are actually available. but making them more widely available to people leveraging technology to do so, there's a huge opportunity here. We're gonna take a short break, but when we come back, more from Alex about the struggles Americans face in becoming homeowners, and how his company landed is working to change that.

Stay with us, I'm Guy Raz, and you're listening to how I built this lab. One more thing before we get back to the show, please make sure to click the follow button on your podcast app so you never miss a new episode of the show. It's usually just at the top of the app, and it's totally free. Uh Welcome back to How I Built This Lab. I'm Guy Raz. My guest today is Alex Loften, co-founder and president of Landed. So

The the problem is is that there are all of these so-called essential employees, people who have essential jobs. Who have a stable, steady income. Some of them earn a pension, but in many cases they don't have the cash to put down on a home. So you come up with a concept to figure out a way to help finance that, to give them

Let's talk first about how you decided jobs. Be eligible. That

decision on who our customer was at the end of the day came after We figure it out. this tool, to be honest. You know, we we because for all the reasons that you just let you list it, it was who's who most acutely is going to feel this problem of not having the upfront wealth. needed to buy a home. And who don't have the only other option that's available out there, which is the bank of mom and dad. Yeah. You know, going and borrowing money for or getting money from a family member to get started. If you don't have that

Who who is having this problem? Well it's the person who could otherwise afford a mortgage, right? Our product. helps people who have enough money. Two.

To afford rent. on a on a monthly basis, but can't do that and afford the down payment. I mean if you can afford to pay eight hundred to fifteen hundred dollars a month in rent. Y in most of America you can afford to pay a mortgage.

Mm-hmm. Right. But if you but if you don't have the whatever a hundred to two hundred thousand dollars up front. to get it to get the mortgage in the first place, you're you know

S O L so the core concept here was okay, who who has kind of the jobs that are paying relative enough to afford a mortgage, but may you know may not have the upfront costs. What are the jobs that are relatively countercyclical, right? So if the economy goes down, they still these jobs still exist. Well they tend to be these infrastructure jobs in education, in healthcare. um in government. Mm-hmm. So you know, the lesson here for us was

make sure the product that you have is actually solving a a real problem for people. And this these are the people who are who who are feeling this problem the most. And you could partner with their employer, uh somebody who they trust to to communicate to market. that this product exists. And that's ended up what how what we did. We ended up partnering with school districts and hospitals and and governments to kind of get the word out about our product so that their uh staff wouldn't just feel like, hey, what's this sketchy thing I found on the internet that's on that's offering down payment program, but actually this is something that's trying to address a challenge that they know I have. So nurses teachers first responders The idea is to help them

Get the cash. Now. Before we go on on how this works and And how you turn it into a business. Um you c you came from

You know, a lot of your experience have been in the nonprofit world, right? Um, and so I wonder, did you D did the three of you talk about Making this a non profit. At the outset.

Yeah, well one of the earliest conversations was what's the corporate structure gonna look like? What's gonna be the best And and our approach, our thinking was Okay, we know there's a challenge here. uh for a lot of people with this down payment piece. And

We know that to m create a different world, we're gonna have to m eventually move Just more money than God to make this happen. Because you know, each person, if you're talking about offering up to a hundred fifty thousand dollars per buyer. That's a lot of money when you start multiplying how many people that would use support like this. So we're gonna have to mobilize a lot of money. It's gonna take a lot of infrastructure to get

Yeah. And frankly, there's an unknown timeline here how long it's gonna take to make that happen. Um with an unknown amount of money that's gonna take. With a lot of risk. And it was clear f to us at the time that Venture seemed to be the right fit. Yeah. Um and so, and you know, there's other pieces that are worth mentioning. We were gonna have to compete for talent. And we're gonna need a lot of engineers. Yeah. And engineers

If their option is to go get uh equity in from one company v over us, we're gonna have to compete with that. You needed engineers to build uh an interface for potential Users. In an interface. Um interface for for the for the consumer, but also just a lot of um data management of like what properties what the we know what what properties are being purchased, what their values value is, and what that means for the investors that we're partnering with. So there's just like a there was just a lot of a lot of components there. And so to be able to compete, we wanted to be able to offer real ownership in something. Alright, so you had to raise money and then you'd have a pool of money that you could then use to Give to people.

to help them buy their home. Well, we would be helping people access a traditional mortgage. That was our goal. Okay. You know, we once you get to a traditional mortgage, which basically means you need to have twenty percent down. Right. Yeah. That that was the golden number we're trying to get people to. So our job was to get people to that twenty percent. They they would then have to go to a bank or a mortgage lender. to get the r other eighty percent. But you are focused on the down payment, the twenty percent. And that was what the pool of money you needed to raise. would would go towards. Well, that was one of the pools of money we have to raise. We were one thing that I never thought I would become was a fundraising machine. But the you know, we had to raise money

That was the what's called a propco, the property company. We had to raise money that was available to the individual buyer to invest in their home to help them with the down payment. That was kind of one stream. The other stream was we need money to run our company. Yep. Uh, and that was the the operating business, the opco. And that's where we raise money from venture. So it it has always been a dual fundraising challenge. And and on top of that, okay, that's the fundraising piece. Then we had to actually do the work of building the infrastructure. Right. You know We are building off of uh shoulders of others. I there have been institutions since the 70s that have been leveraging shared appreciation or shared equity to help people into homes.

The reality is though, it's always been specific organizations, maybe one city at a time that was doing this, no one had really figured out how to make us a scalable solution. Mm-hmm. Alright, let me let me see if I understand more or less how how the model works.

basically a homeowner needs money n needs twenty percent for the down payment, they may only have ten percent. So they go to you. And you give them the rest. So let's say they need Hundred thousand bucks, they only have fifty.

You give them fifty thousand dollars. It is not alone. It essentially Is an investment in the future value of their house. And so You get nothing. And then if they refinance their home or sell their home one day

And it appreciates you guys get a cut of how much it appreciates. of how much it appreciates. Yeah. How much of the the part of the change in value. And the person with chair back that portion of the change in value that they agreed to when they bought their home, um, plus what they originally got. our initial model was for every kind of one percent down payment support you get. you would share in two point five percent of appreciation. So if you get ten percent down payment support, you're gonna share in twenty five percent. And

All right, so now lots of questions.'Cause it's It's an amazing model, right? I mean it enables people who don't have the cash up front to get I mean essentially free money and you know you're you're getting an an equity stake in in the future appreciation of the home. But Let's start with what happens if the home doesn't appreciate and the person sells it in ten years.

And they actually Or You know, or to only appreciate a tiny bit. Yep. Well, in that case, what you said about it being feeling like free money w you know would be the case. We're we're always very clear with people this isn't free money. It's a risk. You're taking a risk. Well, it's also I mean there is a real cost to it. If you're if there's a potential that you're gonna share in some of the um equity

you know, essentially that you're gaining from this investment. That's a cost. It's just that it's not fixed. It's not fixed. We can't we're not gonna say it's definitely this percentage of the borrowed money, which is what a loan is. That's what you will do with your mortgage. Um and and the other pieces, it's not there's no monthly cost to it. So in that way, on a month to month basis, this is this is the whole thing, you know, like for most families, we're talking about Back to my own. experience in my family, it's just about cash flow. It's about a month to month management of your money. And so if you can get money that you don't have to add to your debt burden, that can be a huge thing. And that's what this would do. I in other words if I took a l if I needed

fifty thousand dollars from you to buy a house. It's very possible that You know, I wouldn't communicate with you for another twenty years.

I mean we we do our best to communicate with you to let you know the the let you know that we still exist and that hey if you wanted to refinance today, this is what you would share. You may not want to hold on to this forever. We really actively try to manage people out of the partnership because we think of it as a stair step into ownership. Because you want them to own a hundred percent of it. We want them to own the hundred percent of the home. That's in their interest. And then we wanna recycle the capital. You know, our investors that are doing this because they wanna see that money recycled. Whether that's an impact from an impact perspective, they wanna reinvest it in the next teacher or they wanna gain a return from it. Either way, they wanna see that. kind of recycled back before thirty years. So so the goal of course is to build home ownership because that is the most common way to Well, and so

From what I I've read about Landed many of the people who are working with you are coming from lower income backgrounds, also minority communities as well, right? I mean a lot of black Latino first time homeowners who don't have that home that was passed them away they're Parent or grandparent.

Yeah, you're right on the nose there. I mean it's the federal government for generations made it Illegal. to basically build wealth and pass it along to your next generation or set it up so that you got a chance for ownership, but then lost it. That happened in two thousand eight, you know, it most impacted black families. And so

Um the idea that You know, if you have a tool that actually can act as the bank of mom and dad that a lot of people don't have. You could help people get into this game. This game of homeownership, this game of ownership period that helps build wealth. And that's so what we've what we found is that Well e even though you don't have to explicitly say or or focus it on being a tool for Bipok home buyers, let's say, that you do have people disproportionately who don't come from intergenerational wealth using a tool like this.

Alright, so now you take the concept to investors, you've raised I think Close to thirty eight million dollars in total. That's on the corporate side. Yeah. Well a lot more than that on the on the investment side. But yeah. And how much did you raise on the investment side?

We're at about two hundred million. And So I wonder how investors respond. Clearly they they they they believed in this'cause you you raise a lot of money, but didn't anybody say, Well, you know, Alex We're we're you know, we're gonna give somebody cash for a down payment. And it's possible we may not see a return for twenty years if if or thirty years if they take a thirty year mortgage. I mean, how do we keep the cash coming in? Because we've got this pool of t let's say we have two hundred million dollars in this pool. You know.

it's gonna it's gonna dwindle over time if we don't have money coming in Quickly enough. So how do you get it? Coming back faster. Great question. Well that that's why

having a strong relationship with The consumer. And keeping them top of mind on on how their home is not only a roof over their head and a place where the kids grow up, but actually an investment. And keeping them informed with what

might be in their interest, what kind of actions might be in their interest to take to make sure they're getting the most out of that investment, including getting out of this partnership and in talking to investors probably reason people got comfortable with the time horizon is that the you know, the pattern of how people refinance even without landed is something data that you can look at. If you're typically people are refinancing anywhere from five to eight years. to drive down their interest rate or for for some other reason. So if that's already happening, then you can expect that to happen with this product as well. And there are like I said, there are a lot of different experiments with shared appreciation all over this country, um, and actually all over the world. I mean the UK has had one of the biggest share appreciation down payment programs ever done. And and and you know the data shows that people tend to

uh get out much sooner than thirty years. Thirty years matches the mortgage. It makes um makes the government comfortable. We partner with F Fanny May to make sure we follow s you know their guidelines. And so that is a big reason why those numbers like thirty years are there, but the reality is that It's it's in everybody's interest for people to get out of it sooner and we just have the job of informing people and reminding them of that. So what happens now when you have the situation we're in. Which is high interest rates and and presumably the the money

given so far to people, much of it happened before this interest rate regime now. Mm-hmm. Mm-hmm. You know, there's no incentive to refinance if you got a three, four percent Interest rate. You know, last year, the year before, the year before.

Yeah. one of the conversations you always had with investors As well as on buyers is recognizing that real estate's always cyclical. Right, and that there's there's gonna be changes to Um what

you know, whether it be just the the perceived value of land or things like interest rates, is the these these levers are going to move over time and there's gonna be certain moments when it's gonna be more interesting and advantageous to to say refinance or make a move and others where it might make sense to hold on. And we're in one of those adjustment times, I think What's happened is number one, it's has made unaffordability even more of a challenge. Yeah. Right. So in some ways a product like this is even m in higher demand than it ever has been. That said, we've had a lot of we still have through this entire change over the last year, still have quite a few people exiting the program. Just recognizing that still they when they do the math in the long run, instead of sharing

kind of the the the future gains of the home that they expect, that it makes sense to kind of make a move now. and fold that into their their mortgage. So it's not it hasn't prevented everybody. It definitely has changed some people's calculations. Yeah. Investors think about this as a portfolio investment. It's not just one one investment, one home. This is actually spread out across a lot of geographies and over a lot of time. We're gonna take a quick break, but when we come back, Alex shares more about the barriers to homeownership and how his company landed is working to remove them. Stay with us, I'm Guy Raz, and you're listening to how I built this lab. Welcome back to How I Built This Lab. I'm Guy Raz, and my guest today is Alex Loften, whose company is expanding American homeownership by assisting educators, healthcare professionals, and government workers with those pricey down payments.

So essentially, right, you are uh I mean, again, to restate the the obvious you're investing in the home and and the future appreciation of that home, right? The equity share. And But are do you have other revenue streams that you've developed. I mean are you for example

If one of your customers buys a home, do you work with that customer to get the the commission on the home purchase? Great question. So that that that's where kind of going back to where we were talking about kind of this Idea of Opco and Propco. That's where these two things are really important to think about because the investment in the down payment program that eventually goes to home buyers, that doesn't come back to landed inc. That's not what pays my salary or is what our venture capitalists are seeing their return from. We are just facilitating that relationship and that transaction. You can almost think about our down payment program as our differentiating marketing tool.

That's people are coming to us'cause they want that help and they want that tool, but ultimately We set landed up initially as a real estate brokerage. I see. So just like uh how Redfin and others got started, we would partner with real estate agents uh who if we bring them a lead, a home buying teacher who wants to use our program, they agree to share in part of their commission with us. In other words, if you guys

Bring in a potential home buyer who buys the home. And uses landed to help with the down payment. You guys get a cut of the commission. the commission. And then we s we expanded that to um mortgages as well. Started our own

a joint venture mortgage business, we were able to be a mortgage broker in that case. And the idea here is that the growth in the in the In the business side can come as you as you add on more products. So you've basically have m at least three revenue streams. It's it's the commission on the s home sale potentially, it's the Commission on the

being a mortgage broker and then a a b share of the equity of when the home sells or gets refinanced. Well the third the third component, that share of the equity of the home when it gets refinanced, we we d we had baked that into our own um into our own revenue models. That that would go back to the investors that we partnered with. Right. You know, we we we always recognize that there's a there's an option to kind of like an any traditional fund investor, have that be a revenue stream. We felt like it was a better idea to try to be a neutral third party rather than being the investor, just kind of facilitating that so we could play

You know. Traffic cop, if you will. So you're essentially running A fund an investment fund for people to invest in these homes, but you're not taking a fee uh or any money from it. It's really, you know, you can think of it as these these these investors already know they are going to invest in real estate and want to invest in in real estate and they have the money available, but they just don't have a mechanism to get it out there efficiently. And so they wanna work with us to be that mechanism.

So does that mean that you also have Real estate agents? Who work for you in mortgage brokers? We have partners.

We have partner real estate agents. That work for like other companies. Yeah, Coldwell Banker or you know NRT, any of these any of these big big names. Um and that we Mm. you know, we just say, Hey, you're already spending you're gonna spend a lot of money on marketing. Think about this as your marketing budget. We're gonna bring you leads, right? Then you have to go find that person. We're gonna literally bring you someone who's more ready to buy than they than most of your leads in the first place because, you know, they've come to us, learned about the financing, have now access to a down payment program that helps you know, get them ready to buy today instead of having to wait a few years to save for a down payment. So it's sort of like it's like the Expedia model in a sense, right? Like Expedia sends you to a hotel, they're generating the lead.

That's right. We're a lead generator. Yeah. You got it. And you know, I and I and what's been really interesting with the change in this last year with interest rates and shift in the economy overall. We also recognize that um that that has been our revenue model until now. Uh and and with the the change in in the market. we recognize there is a need to diversify how we, you know, operate the business to still provide a similar type of

Offering. But um look at different revenue models and and we've we've we've started to shift more t as a B to B where we are working with um organizations, you know, hospital systems, uh, universities, uh

even come some companies that have capital invest themselves and want to offer home ownership as a benefit. Yeah. Or housing as a benefit. Uh, but don't want to hire a bunch of people to do the work that we do. They don't want to re you know, rebuild the the systems that we've built to try to make that done be done efficiently. So now we're white labeling the kind of down that same down payment structure for other institutions. So you sort of do all of the background work. But but

But less fundraising. Yeah. Yeah. Cause one of the things that we learned over the you know, we started this company really integrating the two jobs of building the infrastructure and technology platform, which was the, you know, ultimately Yeah. generating revenue through our partnerships with real estate's there. That was the business model with a need to fundraise a lot of capital.

For real estate investment and shared appreciation. Yeah that we that was all under one roof. And now with kind of the way that was twenty fifteen. It's now twenty twenty three. Different world. And what makes a lot more sense is kind of decouple those two things where There's a lot of work to be done to fundraise, um, whether it be from private money or public money for shared appreciation. And then you need the technology and the plot and the the infrastructure to actually deploy that. And that's what Landed Inc. is going to continue to do, is be that infrastructure layer and Now the fundraising opportunities are um Much bigger than they used to be. State of California just announced California Dream for All, the biggest shared appreciation program ever. Um, and that was something that we helped them design. Uh, and they saw our work and said, Hey, I what if what if the state tried to scale something like this? And so

You know, there's there's a there is a lot of work to be done on the fundraising side, but that's that is kind of now increasingly separate from the work of being the infrastructure to deploy it. So ideally, right, you you partner with a hospital or you know, a healthcare provider or some other business that has employees. They find out about you. And ideally. that person needs help with the down payment, so you can help provide that.

And then you would also help them find a mortgage lender and Work with an agent to buy a house. Yep. G get your home buying team together, as we like to say. That's it.

And so that customer doesn't pay you anything and all the money comes from these other these other providers. The other institutions. Yeah. In this case, the hospital system you you work for would pay landed as a vendor to kind of run this program for them. And then the money that's actually invested in that home is going to be coming from that institution. And the you you wouldn't need to kind of pay anybody anything until you're deciding to end the contract. What is the average amount of money you're giving in down payment assistance. Well, it totally depends on where, right.'Cause in the Bay Area you're well over a hundred thousand dollars and you're like

A hundred and ten thousand dollars or so, but it's average out and the next biggest market for us was m um Denver, Colorado, and very different. market, though increasingly catching up. Um so I think on average now we're somewhere between um seventy and eighty thousand dollars uh per home buyer. What sort of age ranges are you are you seeing and people approaching you. You got everybody. I mean I mean, obviously

First time home buyers. This is very attractive too because they don't have another asset. to sell and, you know, have some down payment for. So that means a lot of people who are in their maybe late twenties, early thirties, a lot of people right, you know, making big life decisions, getting married, maybe gonna have kids, um, but you also have people who are retired or near retirement age and haven't ever owned a home and want to own their home now. Or You know

Uh there's one one home buyer I remember who shared that she needed help from from Landon because she needed to buy a bigger home because her kids were moving back in. You know, that's just a that's the world we live in now. And you know, now she was gonna have her kids and her grandkids under one roof. And so she was gonna need a little bit of support to get there. So you really have people dip coming up this from all sorts of angles. How much do you think this some of this will shift?

I mean, over the next twenty years, thirty years, you're gonna see a massive transfer of wealth. From boomers to their children. Yeah. I mean th I think that there that that is true. There's going to be increasingly As as Boomers. Pass away. There's gonna be a another shift in intergenerational wealth, which is going to trend

demographically it's just gonna trend to the boomers that have money. Right. Yeah. So it's gonna be the same people. who have the money are gonna be passing it along to the s to the same types of people. And that's how capitalism has worked since day one. Right. Um and so if you're trying to figure out

tools to mitigate some of the You know. The the effects of capitalism that are are destabling. Again, if you have a society were There's a ton of have nots and and not a whole lot of haves. It we we've seen that story play out before and it's not great.

And if you want to try to like chip away at balancing that back out so that Um, you know, we can have societies that are that survive, then you need to think about this sort of thing. How are you gonna give access to People who don't know.

to families who haven't been a who who haven't been able to jump into that. uh into that game yet. Yeah. Um, and that's that's kind of you how where you can think Landed fits in as just helping people access that. Do you think we can make that happen? I mean, I think most people are concerned about the unaffordability of housing in many metro areas, especially people who have lived there for a long time because they

they want good public schools. They want teachers to be able to to live in the communities where they teach. They want nurses to live in the communities where they Provide care. I mean in in the Bay Area. Many of those folks live in Stockton or Tracy and are driving two hours into the city every day. And and that is incredibly destabilizing. But at the same time, our system is designed in such a way where everybody wants their home to get m you know, to appreciate and then they they can build their wealth and then one day sell it for more money. So it's

On the one hand, everybody complains about this, but on the other hand, nobody wants to say, Well You know what? W maybe my house shouldn't shouldn't Appreciate and value so much. Yeah. Let me let me let me get off the let me get off this this this Merry go round and

We're all we are all both um complainers and complicit. So how how do we how do we You know, how do we fix that? How do we solve that? That's I mean that that comes back to the heart of what really inspired me and Jonathan. I think it's funny that The analogy I like to think about is

Elon Musk and Tesla. Now I'm always hesitant to bring up Elon Musk because a lot of I I'm not gonna I'm not an Elon Musk um Follower. But I but I do think one thing he has been really good at Is painting really long term

picture of the future. Yes. And and asking what are the real world imp impediments to getting to that future. Yeah. And then trying to prove out how to overcome those barriers. And uh with each one of those steps. something moves from being, well, it's only done this way, it can never be done another way. That's just what we're stuck in, too. Maybe this is of okay for some people, appropriate for some people too. This is the way it is. And you know, that's electric cars and Tesla. I mean people said like it's never no one is ever really gonna want to go away from the from gasoline powered cars to th this is only for wealthy people to

You know, you have every car company now. Switching their entire fleet to electric. So I think Part of this is you gotta start somewhere and say Yeah, this is the world that we live in. Do we like the fact that um

Resident Real Estate is a speculative market. Not really, but we should have changed that w many decades ago in the thirties when it was kind of enshrined in how mortgages were done and that ultimately became a speculative investment that people could build wealth on, which has been powerful for many families, but it's also led us to where we are today. So if that's the case, then what are w what's a different way to think about ownership besides kind of a zero or one

option an all or nothing. game where you gotta have this giant amount of capital up front to actually get a home. Well what are so what are some options in between to try to de democratize and diversify the number of people who have access to that same tool. And so that's that's where we came at this problem from. with a shared appreciation thing. This is one of those tools that could help chip away that in the future, somebody would think, actually the way to buy a home is to have a co investor in it until I can be a full owner versus needing to be owner right off right off the bat. And with that kind of thinking you can move from saying, Oh, there's just no way this is ever this is this intractable problem that w there's nothing to do to like, hey, let's go test it out. Let's see if this works in a few markets with a few people, and if it does, let's expand it. And that's what we've been working on. Alex Laughton

Thank you so much. Thank you so much, guy. That's Alex Lofton, co-founder and president. I've landed. Hey, thanks so much for listening to How I Built This Lab.

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