Why Did T&H Choose Rhino’s Security Deposit Alternative?
We’re very proud of our ability to lease homes.
To good Residents who pay on time and take care of the property.
But when we changed our security deposit requirements a while back, and began requiring higher deposit amounts to people with lower credit scores, we ran into an issue.
A common scenario we encountered went like this…
Our Leasing Manager: “Hello Qualified Applicant. You’ve been approved for the home at It’s A Nice Property Way, but because of your credit score, you are approved at a double deposit.”
Our Qualified Applicant: “What? I have to pay a double deposit? The rent is $2,000 a month, so I have to come up with a $4,000 deposit at move-in plus the first month’s rent? That’s not going to work. I’ll continue my search.”
As it turned out, in our effort to provide our Clients with added security, we sometimes slowed down the process of leasing homes because of our double deposit requirements.
As professional property managers, we know that vacancy is a huge expense and hassle for our investors, so we work very hard to minimize the vacancy.
But, we also want to protect our Owner Clients and their assets, which is why, in some cases, we charge a higher security deposit for applicants who may not have very high credit scores.
Now, the conservative investor out there may say, “Good… if I’m taking on a less-than-stellar applicant, I want to have the extra security. Keep looking!”
And while we totally get and actually buy into that mentality, don’t like the added vacancy either.
Bottom line: We needed a solution.
How could we increase our leasing velocity but still provide excellent protection for our Owner Clients?
Over the past several years, single-family property managers have seen an influx of technology and resources spring into our industry.
These companies are focused on making the highly complicated business of property management work more efficiently and solve problems.
In 2016, a company called Rhino entered the market, offering a security deposit alternative to multi-family and single-family residents. Several months ago, Rhino began gaining momentum in the single-family space.
Instead of paying a hefty, cash security deposit, applicants can pay Rhino a small monthly fee. In exchange, the investor gets an insurance policy for a pre-determined amount that acts as a security deposit.
After a short demo, we were sold and began offering Rhino several days later.
We now have a solution to the large upfront costs that applicants faced at lease signing. As a result, our leasing velocity has increased significantly. Oftentimes, we go from approval to signed lease within a matter of hours.
There’s no more waiting for an applicant to fund the security deposit, negotiating with applicant on when the Security Deposit is due, etc.
How It Works
We still offer both a cash deposit along with Rhino. It’s the Resident’s choice. But, as you might imagine, nearly all applicants are going with Rhino.
If the applicants choose the Rhino plan, we send them an electronic registration invitation that matches them to their selected property. The applicant is then directed to a Customer Portal to apply for coverage.
Once an Applicant has received their invitation, they can sign up for Rhino in as little as 90 seconds. Rhino gathers basic information from the applicant and creates a custom premium based off the applicant’s specific qualifications. To make the process easier, all applicants who have met our screening requirements have a guaranteed approval with Rhino.
Once registration is complete, Resident’s pay Rhino directly for their insurance premium amount. Residents can even pay the entire premium in full if they want to avoid the monthly payment.
After move-out, if there are any damages or money owed, we file a claim with Rhino, submit the proper documentation, and Rhino will reimburse us up to the selected coverage amount.
Rhino will the go through the process of collecting any balances from the Resident. So, as the PM, we get our money without any delay, which is key.
Ability to charge a higher deposit: Previously, our deposit amount was either 1Xs or 2Xs the monthly rental amount. Now, we are able to have a deposit coverage amount of 2Xs or 3Xs the rental amount. This provides added protection to our Clients that we didn’t previously offer.
Because Rhino’s premiums are so small, the incremental differences between these deposit amounts are small.
Flexible plans: Applicants who choose Rhino can pay a small monthly premium (typically around $10-$15 month) or, as noted above, they can choose to pay the premium in full and forgo the monthly payment. Again, this eliminates the Applicant from paying a large cash deposit.
Rhino has an excellent partner support team: Their website is catered to Property Owners along with Renters for a satisfactory experience for all parties.
While we have only been on the Rhino program a short time, the early results are extremely promising. Without question, Rhino has solved a big problem for us and has create a win-win-win scenario for our Clients, Tenants and us.