Why We Invested: PadSplit
As more and more people migrate towards urban areas in search of education and economic opportunities, cities and suburbs across America are experiencing a housing crisis. Complicating matters, new housing production has not kept up with demand. Taken together, this imbalance has led to a rapid rise in home prices that has displaced lower income families and workers.
By affordable housing standards, households are considered cost-burdened when they spend more than 30% of their gross income on housing expenses, regardless of income level. Today, 48% of American workers earn less than $30,000 per year. This would leave almost half of American workers with just $750 per month for housing — an impossibility in many U.S. cities. With limited options, too many Americans are faced with an impossible choice — overspend on housing, thus threatening financial security, or move away from city centers, increasing transportation costs and time strains.
PadSplit is helping address this market inefficiency by expanding the existing housing supply, without requiring government subsidies. PadSplit is a digital housing marketplace that allows private landlords to convert single-family homes into affordable, co-living residences. These residences are fully furnished, renovated up to specific standards, and include private bedrooms alongside a shared kitchen and common space.
Individuals seeking housing are matched with options closest to their place of employment and become members of PadSplit. Once a resident moves in, their membership is paid week-to-week through the platform to match paycheck cycles, and includes all utilities, on-site laundry, parking and internet access. Average costs for PadSplit residences hover around $550 per month and no long-term commitment is required. PadSplit is also launching a savings platform for members.
Why We Invested
PadSplit offers a secure and affordable solution for a large, yet underserved, segment of working-class adults who face severe cost burdens when seeking suitable housing. The market is complex, however the team — led by Founder and CEO Atticus LeBlanc — has deep experience across real estate and affordable housing, as well as a thoughtful approach to navigating the legal and regulatory environment. They believe in building partnerships with all stakeholders — including members, property owners, city governments and NGOs — to ensure compliance with local standards and Fair Housing requirements. This has earned them support from Enterprise Community Partners and Urban Land Institute, among others, as well as generated excitement about the model’s potential across the sector.
By providing affordable housing solutions, PadSplit aims to radically improve the financial lives of working-class Americans while enabling them to live within reasonable commuting distance of their place of employment. To date, the company has secured and placed over 200 individuals, helping them save an average of $460/month between housing and transportation costs. Consider the case of Tiffany Ellis, who moved to Atlanta in the summer of 2017 looking to start over after a series of personal setbacks. After securing a job as an overnight security guard, as well as a PadSplit unit, Tiffany was able to save enough each month to purchase a car and move into her own apartment within 6 months.
By expanding the market, matching individuals with appropriate homes, and facilitating weekly payments to match income flows, PadSplit is enabling more affordable, convenient living for a critical segment of working adults.
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