This month, we’ll talk to mortgage leaders about where the market is headed and how products are evolving digitally to suit buyers’ needs now. We’ll also explore emerging alternative financing options that are changing the game for buyers and sellers. Join us for Mortgage and Alternative Financing Month.
Not everyone needs a house. At least right now.
Safe, secure shelter, yes. A mortgage? No.
And nothing drove that point home like the tragic, life-altering pandemic that’s blanketed the world for the last year. The search for a new way to live drove people from packed urban dwellings to open space and lifestyle-centered communities.
It also pushed many Americans further away from the concepts of down payments, listing commissions and permanent housing. Bill Smith saw it coming before 2020 but can’t deny what the year’s cultural shifts did for his company, Landing.
“When I started working on this business, I thought that over the next decade people would transition to living this way,” Smith told Inman last summer. “I thought that would happen over about a decade where it would increasingly grow. And what we’ve seen is, I think that’s been accelerated by COVID. People are living, particularly in cities that have been harder hit and have stricter lock downs. They want to leave and they want flexibility to go to other places.”
Smith created more than a business; he created a lifestyle. Landing has been funded to the tune of $180 million since its inception. It’s not even two years old.
The Inman Handbook on Landing offers a primer on what is sure to be a trailblazer in the apartment industry. It’s taken the timeshare and made it cool, offering those who don’t want to settle down right away a simple, web-based way not to be their parents.
Table of contents
Remote work has exploded, and it doesn’t look to be slowing down much, even as the country starts to envision a return to “normalcy.”
“We haven’t seen the end of pandemic-driven relocation; there will be a second wave of migration this year as permanent remote workers are able to let lifestyle preferences and affordability rather than proximity to the office dictate where they live,” Redfin Chief Economist Daryl Fairweather said in a statement in a January Inman report by Veronika Bondarenko.
“As homebuyers who want more space for their money continue to move into suburban and rural areas, local governments will need to allow more homes to be built to accommodate them.”
The problem is, builders won’t build those homes in time.
Younger, travel-oriented technology professionals, gig workers, and contractors are free to roam and work in the meantime.
“That said, at 83 percent, the vast majority of people currently working from home expect their current arrangement to continue long into the future,” Bondarenko wrote. “As a result, Redfin expects buyers of all income brackets to continue relocating at higher rates in the coming months.”
Yet, for millennials, a crucial homebuyer demographic, there’s more to the relocation trend than the thrill of new places. It’s about affordability. Many of them don’t believe they will ever be able to own a home. Renting is their long-term reality.
Inman reported last month that nearly one in five millennials have given up on homeownership. In 2020, 18.2 percent of millennials who don’t currently own homes had always expected to rent, up from 12.3 percent in 2019 and 10.7 percent in 2018, according to the 2021 Millennial Homeownership Report.
However, even for those who can afford a home in today’s crazed market conditions, many people are taking the “remote” part of not being in an office very seriously.
According to the Maine Association of Realtors, demand for such sparse living sent September sales of off-grid cabins in northern Maine soaring 30 percent year over year.
“While Maine has seen a noticeable trend toward these bare-bones properties off in the wilderness, agents across the country — including in Oklahoma, New York and Wyoming — reported similar phenomena to Inman,” Lillian Dickerson wrote.
Trends also show that small rural enclaves have become hot markets for remote work nomads and second-home investors. California’s Mountain House east of San Francisco, New Hampshire’s Lakes Region, Maine’s Sebago Lake, and the greater Lake Tahoe region, among others, have all seen sales spike in the past few quarters.
In a November 2020 Inman story on second homes, Marian McPherson reported that Redfin stats showed a 100 percent year-over-year jump in second-home demand.
And while the ability to afford a second home is undoubtedly an appealing — and totally justifiable — goal for many Americans and a boon to real estate agents, it also widens the homeownership gap and reduces inventory in small towns. Thus, remote resort towns become ever more transient, pushing service workers to outlying towns and eventually into new and more affordable locales.
Then, along comes a company like Landing, a $199-per-year membership service that can provide many of the same lifestyle rewards of being a second homeowner to those who can’t afford their first.
Rentals in competitive markets can often be tough to come by, so Landing’s certainty of shelter is another significant benefit to those outside of the mortgage-qualification window. For many of Landing’s options, you don’t even need furniture because they come with their own, specifically selected homegoods.
Landing represents another form of alternative living, the byproduct of the innovation sector’s infiltration of real estate. Whether it’s a rent-to-own model such as Divvy or buying before you sell with Knock, all kinds of new ways to use real estate to better lives are emerging from a historical cocoon that held snug the idea that there’s only one way to achieve the American dream.
Landing’s model enables people a flexible living arrangement through an 80-city (and growing) network of ready-to-go apartments numbering more than 10,000.
Customers can choose from furnished or unfurnished residences in multiple neighborhoods with an array of amenities. They can stay for as little as 30 days or for as long as they like.
Obviously, everything can be done using Landing’s mobile app.
Furnished Landings come with custom-made furniture, bedding, a SmartTV, Wi-Fi, toiletries, kitchen supplies and towels. It’s similar to a high-end hotel stay, and it even includes cleaning services upon request or at approved frequencies.
Landing also handles all fees associated with a lease, including utility costs, for renters of furnished properties.
Per its business model, tenants will pay above market rate each month to cover costs of membership, furniture and other company operating costs. That markup is usually between 10-13 percent, depending on location. Landing pays the property its standard market rate. That difference is part of its profit margin.
Members don’t pay security deposits because the furniture belongs to Landing, and it performs a background check on members. That’s not a bad trade-off.
Legally speaking, members are subleasing from Landing and signing a lease with the landlord, which in most cases is a national, institutional landlord owning thousands of newer, well-appointed communities.
Those who move to unfurnished residences with all of their own belongings are subject to longer-term leases and tackle the utilities independently. There’s an application fee in some cases, and some Landing properties are subject to a $2,000 transfer fee.
Pet fees are charged where applicable, and Landing can ensure its members are in pet-friendly units.
When a member contacts Landing with interest in a city, Landing then turns to the property’s management to begin the leasing process. It acts as a broker in some respects and as a concierge that assists members with relocation questions, fee concerns and other types of service while in a property.
Landing shouldn’t be confused with “short-term rentals” like Airbnb and VRBO. It’s more “mid-term” renting, with members able to relocate to a new city with a 30-day notice to other furnished units.
The furniture and decor are all designed specifically in-house by Landing, which then partners with manufacturers to produce it. Although not every apartment is the same, it will be designed with similar themes and is meant for the individual to feel at home each time they move into a new city.
Landing’s model still has a lot to prove, given its brief tenure. It wouldn’t be the first company to earn a truckload of venture capital and not make it. It’s one thing to have supply and another to have demand.
Landing’s founder is not new to building businesses. He sold a rapid delivery business, Shipt, to Target for all kinds of money ($550 million) and eventually used $15 million of that to launch Landing.
The company is looking to hire a lot of people, according to its website’s jobs page. It also hires “hosts” in each city, team members who greet new residents, clean apartments and are in the area to assist members.
One concern that seems to arise, based on TrustPilot reviews, is the actual apartment members’ rent is not often the one viewed online. On Landing’s website, several apartment pages are captioned with “This image is from a comparable Landing.”
It would be wise for members to ensure they’re getting what they expect when going through the leasing setup at each place.
Reviews also suggest that customer service can be problematic. However, it is new and growing quickly and dealing as an interface between its clients and landlord partners. There will always be issues when managing the needs of multiple parties.
These growing pains don’t seem out of the ordinary.
Trying on cities
The pandemic’s impact on how people value housing will be felt for a long time. Whereas some saw it as a reminder that what matters is family and being together in one place, others took it as a sign to see what else is out there — to seek places to enjoy. The latter is what likely explains Landing’s explosive growth in the back half of 2020.
In May of last year, CEO Bill Smith reported to Inman that his company grew 201 percent year over year. Given that it was founded in 2019, that’s an impressive statistic.
Real estate has always been linked directly to macroeconomic trends. Without delivering into what could be an entire semester course on the subject, this is why real estate agents tend to be in sync with what’s happening in Washington and Wall Street.
It’s also why so many agents work to earn referrals from local chambers of commerce and organizations involved in their market’s economic development. They want to know who and why people are moving to their city.
Landing’s customers want to know this, too. What can I do in Birmingham? I’m a foodie; What are the restaurant options in Denver? Why is Greenville, South Carolina, such a trendy city these days?
Landing’s model allows future homeowners to “try on” cities, a choice few Americans had before such a company emerged. People relocate for jobs every day in America, but how many of them have spent ample time in said city before packing? It’s not always an easy decision for a family, and it’s one that real estate agents are often challenged with helping them handle.
A colleague relocating soon from New York to Texas has not been able to thoroughly vet where he’ll be living with his soon-to-be expanded family, largely because of COVID-19 restrictions. “Yeah, if it weren’t COVID, I would for sure have taken the opportunity,” he said. “Finding the right neighborhood is really important to me, so I’m for sure worried about picking an area I don’t like and getting stuck there a year.”
Landing members have a unique chance to explore and vet cities should permanent living situations ever arise, and as Landing’s partner cities expand, so does the opportunity for people to join to find a new home.
Inman Coast to Coast member Alison Wisnom is an associate broker at Coldwell Banker Realty’s Annapolis Plaza Office and a Realtor at Coldwell Banker Realty Hawaii. She works heavily with military families and plays multiple roles on behalf of her relocating clients.
“My role has been more like a host to a new city and a different lifestyle,” she said. “I’ve helped clients get temporary housing so they could look at homes in person, have sold several site unseen, tours by video long before COVID-19. I’ve helped introduce them to spouse job opportunities, sports teams for their kids, people who shared their hobbies, and playmates so their kids would know someone on the first day of school.”
Real estate agents can leverage Landing as a temporary living recommendation for clients relocating to their city. Landing can also help those buyers wanting to relocate to heavily competitive seller’s markets. Spending time in their desired market can help buyers fully grasp it if they have to make an offer sight-unseen. The more time buyers get to know a city, the more confident they’ll feel under the pressure of a multiple-offer scenario as well.
Offering to cover their initial annual membership or coordinating with the local Landing host could be considered nice customer service touches. Partnering with Landing to display marketing collateral in certain unfurnished, longer-term units might be a worthwhile effort, too.
However, given Landing’s commitment to not committing to long-term living, they may not be overly responsive. It’s worth a shot, though.
With its list of 80 markets and no signs of slowing, there’s plenty of reason to learn more about Landing’s model.
The rental market has long been a primary target for residential sales agents. It makes sense. Traditionally, renting comes before owning, and most renters aspire to become homeowners.
The current seller’s market has become more challenging for today’s renters, but these conditions aren’t permanent. They never are. Thus, agents should not give up on their efforts to woo the future business of Landing members.
A time-honored tactic for getting in front of renters is education. Free seminars, white papers and outreach efforts about what it takes to buy a home can go a long way toward ingratiating agents with prospective buyers. Try to avoid preaching about the “benefits of homeownership.” It’s a tired approach, and the topic isn’t lost on renters. In fact, it comes across as condescending.
The majority of renters are aware that owning has many long-term financial and social benefits; the issue is almost always rooted in personal finances and of course, the state of the market. “Renters have lots of things they dislike about being tenants as opposed to homeowners,” wrote columnist Lew Sichelman. “They complain about rising costs and that they are throwing their money away and not building equity. They also gripe that the place they are renting doesn’t feel like a true home, and they feel they are paying their landlord’s mortgage.”
Agents may see more success when they approach renter leads as “certain buyers” who simply haven’t found a home they like. Ask them about preferred neighborhoods and home types, and what kind of timeline they’re considering. The more you can relate today’s renters’ condition, the more apt you are to find them in your pipeline. It all comes back to relationships.
“It is necessary to understand your business as a combination of ‘little picture’ and ‘big picture’ thinking,” she said. “Your ‘little picture’ is the idea of which clients you can help now to fill your pockets, but these clients will eventually add to the pool of your ‘big picture’ clients after you’ve formed a relationship with them.”
Castrorao suggested staying in touch with renters regularly during their lease cycles, using each term as a milestone for reaching out. “This relationship should continue to grow throughout your interactions together by treating them as a person.”
Landing members are still renters — they still want a nice place to be in a city they enjoy. They may be gone in a few months, as is their nature, but it should be in your nature to give them a reason to contact you should they decide to come back.
Redfin announced in February that it acquired RentPath, which owns Rent.com and ApartmentGuide.com. There’s little doubt that the innovative employee-based brokerage will find a way to access the immense database of renter information it now has at its disposal.
“When approved, this acquisition will bring together a leading site for buying a home with a leading site for renting a home, giving anyone trying to move a complete view of her options,” Redfin CEO Glenn Kelman said in a statement announcing the news.
Landing’s rapid rise in the rental market may show that many of its members aren’t quite ready to settle down. However, the company can’t survive unless it churns its customer base, and like most renters, those who leave will be seeking more permanent foundations on which to build a home. Be there for them.
Have a technology product you would like to discuss? Email Craig Rowe
Craig C. Rowe started in commercial real estate at the dawn of the dot-com boom, helping an array of commercial real estate companies fortify their online presence and analyze internal software decisions. He now helps agents with technology decisions and marketing through reviewing software and tech for Inman.