Private equity is coming to the masses in the form of a company making bets that home values will increase over time.

For Theodore J. Wotjas, the founder of Chicago-based Buyers Equity Fund, his effort is also nothing less than an attempt to help bring stability back into the U.S. housing market. Wotjas, 38, grew up the son of a truck driver and a nurse’s aide in a bungalow on Chicago’s North Side and bought his first home at age 18 with money he had earned building garages. He says a little equity investment can go a long way. “It will stop the downward slide of values,” by putting money in home buyers’ pockets and betting on the long-term growth of the housing market.

Wotjas said he came up with the idea for using the principals of private equity in the housing market after nearly 20 years in real estate. He was a licensed mortgage broker by the time he was 23. In 2000, he expanded into real estate portfolio management, founding E&T Real Estate Enterprises.

He has been working on the latest project since 2008.

So far, the fund has raised $6 million. But Brian Collins, the fund’s chief strategy officer, says the fund is issuing $2.1 billion in bonds, and has received interest from institutional investors, building trades labor unions, and foreign investors.

Wotjas said the fund is expected to be up and running by the end of September as it builds out a nationwide network of developers and others to work with. Neither he nor Collins would name any of the developers the fund has contacted.

The Buyers Equity Fund will invest in the future value of a home, providing home buyers with up to 15 percent of the purchase price of a home. The fund is actually betting on the home’s future value, not on the homebuyer’s ability to pay. The deal is completely separate from any mortgage the buyer has to negotiate with a bank to buy the home. The fund gets its money back, and more, as the home’s value appreciates over time.

The homebuyer can use the money from the Buyers Equity Fund for anything they want – from paying off debt to going on vacation.

Homeowners don’t make monthly payments to the fund. Instead, they agree to stay in the home for at least six years, and for up to 40 years. As the value of the home grows, so does the amount of money Buyers Equity gets out of the investment when the home is sold.

For instance, if a buyer purchases a home for $240,000 and receives 10 percent of the value of the property after the purchase closes from Buyers Equity Fund, the buyer would get $24,000. If the homeowner then sells the home for $375,000, the seller has had an increase in value of $135,000. The fund gets its initial $24,000, plus 30 percent of the increase in the value of the home, an additional $40,500 in this case.

If a homeowner has to sell at a loss or break-even after six years, the fund loses its investment. “That’s where the fund takes a potential hit if you will,” Brian Collins, chief strategy officer at the fund, said.

The fund determines whether it will invest in a given house based on analyzing a developer’s work, and an area’s sales, among other factors, Collins said. He said the fund had been reaching out to developers, banks and real estate agents around the country to develop its program.

It all sounds like it could be a pretty good deal for the homeowner, said Steven Persky, CEO of Dalton Investments, who also manages Dalton Advisors, which provides investment management for high net worth clients. But he’s not so sure Buyer’s Equity is such a great investment proposition.

“From an investment perspective, it just doesn’t seem that compelling to me,” he said. “If you want to make a contrarian play on a bunch of homes, this may be a way of doing it.” But, “Why wouldn’t I want to own the homes outright?”

Or, why not make money buying tranches of subprime mortgages for pennies on the dollar, as his Dalton Distressed Mortgage Opportunity Fund has done.

“The other part is, we’re earning double digit returns buying mortgage-backed securities,” he said. “Why go through all that effort when we can generate 20 percent returns all day now?”

Wotjas, though, said that, yes, there will be returns on his private-equity-for-the-masses play. And he adds that it’s also meant to be a benefit to the communities where it will be working.

“We’re infusing capital into the community,” he said. “Just buying and selling or buying and holding there are funds out there that are making tremendous returns. Let’s say it is just a buy and rent, I don’t think it … stabilizes the community. We wanted to really help the community and we’re still generating a return. There’s no doubt there.”