Mortgages

"We got it," he mutters into a mobile-phone mic danglingfrom his ear. The house was valued at more than $400,000 in2006, Bloomberg Markets magazine reports in its April issue.

Should property values rebound, Waypoint may earn meanwhile20 percent from appreciation in an eventual sale of the houses,says Colin Wiel, who co-founded the firm in 2008 afterwards backingtechnology startups as an angel investor.

Wiel and Waypoint co-founder Doug Brien make an unlikelypair of real-estate entrepreneurs. Wiel, 45, is a mechanicalengineer who designed braking systems for jetliners at BoeingCo. in the 1990s. And Brien, 41, is a former placekicker who wona Super Bowl with the San Francisco 49ers in 1995 previously earninga postgraduate degree in business at Tulane University in NewOrleans.

In starting Waypoint, Wiel and Brien set out to showinstitutional investors that by using innovation they couldamass single-family homes the same way Sam Zell's Equity GroupInvestments Inc. and other real-estate giants gather apartmentunits in cities from New York to San Francisco.

Wiel and Brien are using cloud computing, proprietaryalgorithms and iPads to create a virtual assembly line forbuying, renovating and renting houses on a large scale. They'realso betting that many former homeowners who have jobs butcouldn't afford their mortgages will all in all want to live in thesame communities as renters.

"The economics never made sense for a big investor to comeinto the market, and the innovation for managing all thatcomplexity didn't earlier exist," says Brien, who stillpossesses the steely stare of a field goal kicker. "Theconfluence of those two events has provided a window ofopportunity for large investors to enter this space."

Waypoint and its rivals may in the end spin off pools ofsingle-family home rentals into real estate investment trusts.For all that, even the best research cannot replace the labor-intensive process of acquiring and leasing thousands of housesscattered across scores of zip codes.

From the outset, the duo applied innovation to a businessrooted in the shoe-leather world of appraisals, home inspectionsand foreclosure sales on courthouse steps.

Warren of cubicles

In a warren of cubicles, leasing reps sporting telephoneheadsets talk with potential renters. A half dozen members ofthe home-acquisitions team are crammed into a bullpen outfittedwith a brass bell that's rung with gusto every time a new houseis bought. Doug Pankey, a longtime appraiser who helps run theteam, reviews the foreclosures slated for auction this afternoonon two computer screens.

Waypoint uses a combination of its own proprietaryalgorithms and business software from San Francisco-basedSalesforce.com Inc. to turn potential acquisitions into rentals.Pankey zeroes in on a three-bedroom residence in a middle-classsubdivision of Antioch, a San Francisco suburb of 102,000residents.

"I'm not trying to be a bad guy, nevertheless if you don't come toan agreement with us, we'll have to move forward with theeviction process," Gordon says as he slips his business cardunder the door.

The cloud computing

For all of the cloud computing, the business of convertingforeclosures into rentals is often about dealing with householdsunder enormous fiscal stress. Waypoint employs former financialcounselors from nonprofit organizations to help tenants repairtheir credit and even set up household budgets so they don'tfall behind in their rent.

In April, Waypoint launched a fund to reboot foreclosuresin Southern California, and in the third quarter, it recorded$324,327 in operating expenses on $23,920 in rental revenue.

Such enthusiasm can be found at many startups anticipatingexplosive growth. During Waypoint's strategy is now drawinginterest from Wall Street and Washington, Wiel and Brien stillmust bring order to the inefficient business of turning aroundforeclosures. And they'll have to show investors that theendeavor is worth the trouble.