NEW YORK–Has a new startup stepped into a lending niche credit unions should consider?
Rhino has been launched with a goal of replacing the need for a costly security deposit that keeps many renters in New York City from being able to move into a new place.
The company’s model calls for people to pay a monthly fee of $19 and it provides the security deposit to landlords.
Rhino, which has received nearly $2 million in venture capital, reported that due to the low risk it has been able to partner with a global insurance firm willing to back individual insurance policies unique to each tenant that would be hashed out by an algorithm its founders have developed. The algorithm uses renter information that includes income and credit history, and calculates a monthly payment.
In New York City especially, security deposits can be a challenge both for tenants — who often must come up with thousands of dollars that will be locked away for at least a year — and landlords, many of whom must keep each tenant's money in separate, interest-bearing escrow accounts. In nearly all cases, noted Rhino CEO Paraag Sarva, most security deposit money is returned at the end of a lease.
Rhino said that when a renter is accepted for an apartment, the landlord gives them the option of making the standard deposit, or paying a fee to Rhino. Rhino takes a percentage, with the remaining funds going to Canopius US Insurance. Landlords do not pay for the service, but in the event of damage or nonpayment can file a claim for up to two months' rent. Tenants remain responsible for damage or unpaid rent.
FirstService Residential, which manages approximately 10,000 rental units in New York, has already said it will partner with Rhino.