The cheaper way to buy a house? Rent the land underneath

Brian Elbogen couldn’t afford a house in San Francisco. So he bought one-third of a three-unit building. That got him wondering: Were there other ways to slice a home’s price down to a manageable size?

That insight led Elbogen to launch Jubilee Homes in 2024, built on a simple premise: You buy the house, Jubilee buys the land and rents it back to you. This model, called a land lease or leasehold, can shave six figures off a home’s price. In expensive markets, land accounts for more than half a home’s value. Jubilee buyers can put down just 1%–2% of the property price and trim their monthly mortgage by 20%.

“It helps buyers get their foot in the door,” Elbogen explains. “Everyone understands owning and renting, but there’s a big chasm between the two. This hybrid solution allows people to bridge the gap.”

A new spin on splitting a house

Residential leaseholds are common around the world, but are relatively rare in the US and have a bit of a bad rap. But as Elbogen points out, “We’ve gone through the history books and designed a version that ensures everyone has better outcomes.” For instance, the most Jubilee can raise “ground rent” is 3% per year. Buyers always have the option to buy the land at its fair market value for up to 99 years. If they choose to sell, they can recombine the house and land into a traditional sale. Unlike renters, they build equity; unlike traditional buyers, they pay a fraction of the price.

Leaseholds are just one of several approaches companies are using to make homeownership more accessible. Ownify lets buyers in with only 2% down, covers the rest of the down payment, and collects fixed monthly payments as equity builds. Acre Homes takes just 5% down and grants buyers half of the home’s appreciated value over five years. Although fractional ownership is often built for first-time buyers who need a foothold, investors have noticed the discount, too. But not all are eager to share.

“I don’t buy fractional ownership since you don’t have full control and may face a difficult exit,” says Shawn Zar, a real estate investor in New York City. “I prefer to own 100% of even a small property.”

Leaseholds, in particular, can come with risks: Not only can ground rent go up, but resale and refinancing can be complex, and some lenders may steer clear. And even in the best of circumstances, leaseholds and other fractional models come with fewer upsides and more tradeoffs: You pay less, but gain less—although you also risk less than you would pouring every last cent you have into a house.

“Owning a house can be a very concentrated bet on a single illiquid asset,” Elbogen points out. “By having less tied up in your house, you can diversify—with stocks, crypto, or even other real estate.”