Landed helps educators stay in the Bay Area

Everyone in the Bay Area knows the cost of housing is high, and that makes it hard for local teachers to live where they work. But Landed, Inc. is here to help.

Landed, Inc. is a small San Francisco-based startup that helps Bay Area teachers afford homes. Co-founders Alex Lofton, Jonathan Asmis and Jesse Vaughn were inspired by sharing economy models, such as Uber and AirBnb, and applied this idea to the home market, Lofton said.

The company works with community investors to start a fund, then partners with local teachers to help them purchase homes. Community investors can be anyone interested in supporting educators, from individual parents to companies. Once a teacher has partnered with Landed and has found a home to purchase, Landed will pay half the 20 percent down payment for the home.

“It’s really difficult to find a place to live and to really find a home and build your financial future,” said Ian Magruder, director of partnerships at Landed. “Landed is really built on the premise that people should be able to afford to live in expensive places.”

According to figures from Zillow, a national online real estate and rental marketplace that provides data to consumers, home values and rents are far higher in the San Francisco area than the national average, coming in at an average value of $833,600 and average rent of $3,361 compared to the national averages of $195,300 and $1,404, respectively. This is higher than both New York City and Los Angeles.

The average home value in New York City is $637,900 and in Los Angeles it’s $616,900. Oakland beats out both cities with an average home value of $670,500.

At the same time, the average salary of a teacher in California is below the average Bay Area median income and lower than their counterparts in New York, the District of Columbia and Massachusetts.

During the 2014-2015 academic year, teachers in New York were paid an average salary of $77,628; teachers in the District of Columbia received $75,490; and those in Massachusetts averaged $75,398, according to the National Education Association. California teachers received an average salary of $72,535, which is still substantially higher than the US average of $57,420, but lower than the 2014 average household income in the Oakland area of $78,969, according to the Pew Research Center.

Landed’s first homebuyer, Joel Key, lives in the home he purchased in Oakland’s Fruitvale neighborhood. Key, the principal at Impact Academy Middle Grades in Hayward, was in the market for a home for more than five years before he partnered with Landed.

“There was certainly this idea of I’m just going to keep renting and I won’t be able to, in many ways, make the same sort of investment or attain this part of the American Dream that I saw a lot of my other friends attaining who chose different career paths than I did,” Key said.

After partnering with Landed, Key found his current home in just two weeks.

“I felt very proud after it all went through, that I had saved money and done what I wanted to do with my life in a profession that I feel I get a lot of value out of, that provides a really important service to others,” Key said. “That brought me just a lot of personal pride.”

According to Landed staffers, purchasing a home is an investment and can actually help teachers save and build wealth over time.

Owning a home allows teachers to build equity, and unlike rents in the Bay Area, fixed-rate mortgage payments don’t rise over time. “If you’re stuck renting for decades, all that money is going to someone else,” Macgruder said. “So, the educators benefit by getting into a home.”

Educators aren’t the only ones who benefit; the community investors profit from the arrangement as well. In exchange for paying half of a teacher’s down payment, Landed and community investors receive 25 percent of the appreciation in the home’s value, or incur 25 percent of depreciation when the home is sold or refinanced within 10 years.

“Investors are really excited,” Lofton said, saying the program has “helped a specific type of person in the community they really wanted to see stick around, they really wanted to see thrive.”

Teachers are also a safe investment, Lofton said, because their salary schedules are very steady and they have “predictable employment, even when the economy goes south.”

“I think on average, educators are extremely, extremely responsible homeowners,” Macgruder said.

Landed currently has partnerships and funding from community investors with school districts in Mountain View, Ravenswood and Los Altos, and with the Nueva School. Lofton said there are also interested investors in San Francisco. The company is currently working with 20 educators, he said.

Although Landed is still very new, the staff plans to expand beyond the Bay Area and into supporting other workers, such as firefighters, police officers and nurses. “A few years from now, we want to be helping many, many more teachers, and eventually beyond teachers to what we call ‘essential workers,’” Macgruder said. “I think we’re at a time right now where people are rethinking how homeownership works, and we want to be a part of that.”

Video by Marian Davidson and Cameron Clark.