OAKLAND (CBS SF) – An Oakland company that touts itself as part of the solution to the mortgage crisis is buying up distressed homes, fixing them up, and renting them out at market rates. Renters who complete a year or more of successfully renting a home may have a chance to buy it.

Waypoint Homes was founded two years ago. Waypoint is one of dozens of new companies changing the landscape of the housing market by becoming large-scale landlords. It has since purchased more than 700 homes in Northern California at auctions and on the open market.

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“We saw this problem, and saw an opportunity,” said co-founder Colin Wiel. “We’re taking rundown homes in blighted communities, renovating them, and improving the neighborhoods.”

There’s a classic type of rental arrangement and a Lease-to-Own option.

“They still need to get financing from a bank – and be able to buy the house, but what we’re doing is providing them with a credit, so a portion of their monthly rent is credited back to them at the time of purchase,” Weil said.

Jose Quinonez, of the Mission Asset Fund, a financial education organization, likes the idea of turning distressed properties into rentals.

“It’s innovative. It’s the right thing to do. Actually, the federal government is thinking of doing something similar,” said Quinonez.

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But Quinonez warns not every renter, especially those who’ve had mortgage trouble in the past, will qualify to buy a home they’re renting.

“When someone goes through the foreclosure process you’re taking them out of the (purchasing) market for a good four to five years,” Quinonez said.

Quinonez also said to truly repair a credit score a landlord must report payments to a credit reporting agency, something Waypoint is not currently doing.

Darren Gates of Antioch is a Waypoint success story. Two years ago, unable to make his $3,400 mortgage payment, Gates stopped making payments. Waypoint purchased it at auction and leased it back to him for $1,900 a month.

Gates is a contractor who also does work for Waypoint, and is about to buy the home for a second time.

“We’re renting a home that we used to own, and we’re going to buy it back again,” said Gates, who will be buying the place for less than half of what he paid the first time. “It’s great for the kids. They have no idea any of this is happening. They’re just staying in the home they’ve always known.”

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