While rent-to-own is not a new concept in the housing market, a new real estate company is set to launch that aims to rebrand renting to own into a buyer-friendly proposition.

Divvy Homes, which soft-launched two months ago, claims that its program offers consumers the flexibility of renting with the financial benefits of homeownership.

In the not-to-distant past, other rent-to-own operators were accused of predatory practices by purchasing run-down properties and then convincing tenants to rent the properties despite not conducting any repairs or improvements by offering them the chance to buy the house down the road.

Divvy claims that its business is much different from those companies.

Divvy offers consumers the chance to live in the house they want even if they don’t have enough money to afford to buy it themselves, yet.

In the Divvy program, the buyer will pick out any home for sale and Divvy will buy it. The buyer will typically put 2% down on the home, then pay a monthly amount that includes both rental and equity payments.

If all goes according to plan, the equity portion builds credit in the home, with the goal of building up an equity credit of 10% of the home over three years. During that time, they can also pay down debts and demonstrate enough steady income to be mortgage-ready when that three-year period ends.

At that point, Divvy provides the resident with the option to buy out the reminder of the home with a mortgage, using the credit as a down payment.

Divvy will also offer residents the chance to buy the home at any point during those three years should they find themselves ready to do so earlier than anticipated.

Another way the company is different, according to Divvy Co-founder and CEO Brian Ma, is that its platform is built on technology and transparency.

According to Ma, Divvy’s technology platform is built around application processing, underwriting, and managing these homes, which allows Divvy to scale operations and provide better pricing to consumers compared to traditional institutions.

“Our highest priority is to educate, support, and partner with our home buyers to make sure they transition smoothly into homeownership,” Ma said. “Our program is specifically designed to be fair and transparent - we want every home purchase to be a win for our customers.”

To grow its platform, Divvy recently raised $7 million in a funding round, which was led by Caffeinated Capital, with participation from Max Levchin’s startup studio HVF, and the venture capital firm DFJ.

Levchin is one of the co-founders of Paypal.

“Real estate is an industry plagued by manual processes,” Levchin, who is also CEO of Affirm, said. “The technology Divvy is building around application processing, underwriting, and managing these homes will allow Divvy to scale operations and provide better pricing to consumers compared to traditional institutions.”

The company will use the money to expand operations into Cleveland and Atlanta, accelerate its growth, and build out its team.

“Housing affordability is a massive problem,” said Raymond Tonsing, general partner and founder of Caffeinated Capital. “We’re excited about bringing a tech-enabled solution to market to help more young buyers bridge the gap between renting and owning. Divvy provides a more flexible homeownership option.”