The three-bedroom house in suburban Atlanta on a quiet cul-de-sac seemed exactly what Jeneyha Wheatley-Frett and her husband, Shawn Frett, were looking for when they moved in about 15 months ago with their three children.

The couple signed a three-year lease with an option to buy the split-level house from Divvy Homes, one of the nation’s largest rent-to-own companies. But almost from the moment the Fretts moved into the 30-year-old house in Lithonia, Ga., it was plagued by problems. Rainwater often seeped in. The electrical system was faulty. Some appliances didn’t work. And mold was spreading on some walls, they said.

“When it floods, you can feel the water squishing under the floor tiles,” said Ms. Wheatley-Frett, 41, who works for the Department of Homeland Security.

Divvy, which launched six years ago with financial backing from high-profile investors like Andreessen Horowitz, Caffeinated Capital and Tiger Global, is one of the newer players in the rent-to-own market. It is an unregulated corner of the housing industry long dominated by small firms that buy up foreclosed or run-down homes, and peddle them to those with shaky credit histories as an accessible way to achieve the American dream.

Like many start-ups that want to “disrupt” an industry, Divvy promised to “rewrite the rules of real estate for the better” by making homeownership easy for everyone. Billing itself as a consumer-friendly, tech-savvy company, Divvy put a fresh spin on the rent-to-own market by making it mandatory for customers to put away a portion of their paycheck toward a down payment.

Based in San Francisco, Divvy was valued at $1.74 billion as of two years ago, according to data from Pitchbook. The company, which owns 7,000 homes in 19 metropolitan areas, grew rapidly, but with that came growing pains, including the failure to make timely repairs. Its innovative model also stuck renters with higher-than-average monthly bills. Given rapid inflation, more renters are struggling to pay, forcing Divvy to file more eviction notices.

On Monday, Divvy completed a settlement with the Fretts, who had complained to the company for eight months and were working with a local Legal Aid Society lawyer on a potential lawsuit. The Fretts, who have since moved out of the house, are not permitted to discuss the terms of their settlement.

In an emailed statement, Divvy said that the Fretts had an “unacceptable customer experience,” and that it should have responded to their repair requests sooner.

Approximately 10 million Americans have entered into a rent-to-own deal at some point in their adult lives, according to estimates by the Pew Charitable Trusts. People who sign up for such deals typically have little if any savings and are often evicted from their homes after falling behind on rent. Others are forced to walk away because no bank will write a mortgage for a house that’s in bad shape.

Last month, a Senate Banking, Housing and Urban Affairs subcommittee held a hearing on the risks to consumers from many rent-to-own deals and other alternative paths to homeownership. It’s part of a broader interest by some on Capitol Hill about the impact that investor-owned firms like Divvy have had on the single-family home-rental market.

Divvy and some of the larger rent-to-own companies, including Home Partners of America, which is owned by the private equity firm Blackstone Group, have sought to separate themselves from less reputable players by letting customers choose the homes they want to rent and eventually buy. This way, customers aren’t left with the bad option of buying run-down homes a company picked up on the cheap.

Divvy sets itself apart from other firms by requiring customers to allocate a portion of each month’s rent check toward the down payment for the home. Divvy also charges an upfront fee of several thousand dollars, which goes toward a down payment if a customer chooses to buy the home.

The mandatory down payment works like a forced savings plan, making it easier for customers to secure a potential mortgage. Though customers who don’t buy a home get most of that money back, they are also on the hook for a “re-listing fee” equal to 2 percent of what Divvy paid for the home.

“With mortgage rates at all-time highs, our mission is more critical than ever,” Adena Hefets, the chief executive and a founder of Divvy, said in a statement. “Divvy gives renters the power of ownership: Pick out a home, build savings, and have the option to make it your forever home.”

But Divvy’s mandatory savings plan also means that renters have a far higher monthly outlay compared with customers of other rent-to-own firms. The higher payments have become a struggle for some customers, especially because of rapid inflation. In the Atlanta area, where it owns about 1,100 homes, Divvy has filed 190 eviction actions so far this year, according to a data analysis by the Private Equity Stakeholder Project. In 2022, the company filed 184 evictions in the Atlanta area.

Divvy said many of those filings did not result in completed evictions. But it acknowledges that the number of completed evictions in the Atlanta area is higher than it was a year ago because the company now owns more homes there. The company, which charges a 5 percent fee for late payments, said it evicted only as a last resort.

The company also said it had taken steps to address customer complaints about repairs. This spring, Divvy said, it put in place a new system to prioritize maintenance requests, including a 24-hour hotline for customers. In April, Divvy also told renters that it would waive one late fee a year on a delinquent payment, apparently in recognition that the higher monthly charge because of its forced savings model is causing some hardships.

The Fretts, who are both employed, moved into the Georgia home in May 2022. They said they had been referred to Divvy by a real estate broker who worked closely with the company. At the time, the couple said, they were living in the U.S. Virgin Islands, so they relied on Divvy’s recommended home inspector to tell them if the house passed muster.

Divvy purchased the house for $284,000 and rented it to the Fretts for $2,530 a month — higher than the median home rental price of $2,190 in Atlanta — with an option to buy it for $347,000.

About 47 percent of Divvy’s customers have graduated from renters into homeowners, according to the company. That means some of the people who sign up for a rent-to-own deal from the company walk away, potentially because of a bad experience.

In February, Joe Goske, 54, moved out of a Divvy home that he had been renting in University Heights, Ohio, after reaching a settlement with the company. Mr. Goske, an insurance claims manager, said he had become frustrated trying to get Divvy to address a persistent water problem in the basement of the Cleveland-area home.

“There was no way I was going to purchase this house with those issues,” he said.

In a statement, Divvy said the “maintenance issues that Mr. Goske encountered is representative of conditions that older Ohio homes are susceptible to.”

Sarah Mancini, a senior attorney with the National Consumer Law Center, who testified before the Senate Banking Committee, said that Divvy’s roughly 50 percent success rate might be better than that of many smaller rent-to-own firms, but that it wasn’t good enough. She said it reflected the false promise of homeownership of rent-to-own deals.

Still, the Divvy arrangement does work out for some customers.

In September, Michael Jackson and his wife, Tiffany, bought the house they had been renting from Divvy in a Cleveland suburb for $144,800. Divvy had purchased the home, in South Euclid, Ohio, for $127,500 in 2019.

“We were concerned with rates going up,” said Mr. Jackson, 51, a landscaper and father of two.

Mr. Jackson said he and his wife had secured a mortgage with a 6 percent interest rate — about one percentage point below the current rate. He said with the $12,000 Divvy had already collected toward a down payment, they needed only another $1,300 to close.

“It worked out beautifully,” said Mr. Jackson, whose house has three bedrooms and a large sign outside the front door that simply says “HOME.”