Startup taps industry execs, mayors to pitch security-deposit alternative
“Rhino Housing Innovation Council” will meet biannually
Security-deposit alternative startup Rhino has enlisted a team of mayors and multifamily real estate players to make the case for products like its own to be part of governments’ coronavirus response.
The “Rhino Housing Innovation Council” will meet for the first time tomorrow. The virtual group will include Steve Lamberti, president of Highmark Residential, the property management arm of Starwood Capital Group, and Joseph Strasburg, president of the Rent Stabilization Association in New York, which represents rent-regulated multifamily landlords.
Rhino’s CEO Paraag Sarva will also be on the council, which includes the mayors of Richmond, Virginia; Dayton, Ohio; and Tolleson, Arizona.
For now, the council will focus on educating property owners and policy makers on an alternative to security deposits which Strasburg likened to a “bridge loan” — or a short-term loan used to cover a temporary drop in revenue — available to property owners to make ends meet during the pandemic.
“The first phase had a dramatic impact on rent collections,” said Strasburg. “We are fearful that when the dust finally settles, we will have lost small property owners — they will be the collateral loss during this pandemic.”
Strasburg’s group advocated for landlords to use services such as Rhino to allow tenants to put their security deposit toward rent, especially in the absence of more federal assistance or a break on property taxes. That solution also appealed to Knotel CEO Amol Sarva, the older brother of Rhino’s CEO, as the flex office-space provider struggled to pay rent and laid off staff.
Rhino and other startups, including TheGuarantors, Obligo and Jetty, offer insurance as an alternative for security deposits, to free up cash that tenants can use to pay rent or other bills, and shield landlords from liability for damaged property that a security deposit is typically meant to cover.
The business model garnered attention earlier this year from Cincinnati, which passed a “renter’s choice” bill to allow renters to forgo a security deposit in favor of an insurance policy offered by firms such as Rhino. Similar legislation is in the works in North Carolina.
The idea of insurance in lieu of a security deposit may gain even more traction as municipalities struggle to address the concerns of both landlords and renters. The latest Census Household Pulse survey showed that more than 30 percent of renters were not confident they would be able to afford rent next month.