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How Rhino is taking on the housing affordability crisis

Rhino CEO Paraag Sarva joined Yahoo Finance Live to break down how Rhino is attempting to take on the hlusing affordability crisis.

Video Transcript

SEANA SMITH: Our next guest is helping to get people into new homes or apartments without putting down security deposits. For more on that, we want to bring in Paraag Sarva. He's the CEO of Rhino. And Paraag, great to have you on the program here. I know you're trying to make housing more affordable to people, especially in the midst of this pandemic. Just quick, give us an explainer on how exactly this works.

PARAAG SARVA: Yeah, thank you. It's a pleasure to be here. It's really simple. Our mission is really to give renters everywhere greater financial freedom to plan and enjoy their lives. And what that literally means is we've pioneered a new type of insurance called security deposit insurance that lets a renter move into their home without having to fork over what sometimes feels like, or literally is, your life savings.

So it's several hundred dollars or oftentimes thousands of dollars that gets locked away as a cash security deposit that renters now, with Rhino, can instead just buy a smart affordable insurance policy instead which costs as low as just a few dollars instead of what is thousands of dollars upfront as a cash security deposit.

ADAM SHAPIRO: In these tough times, I know this is probably welcomed by a lot of people. Help us understand the hurdles to get to the deal as closed. I imagine you need a landlord willing to accept it. And then how do you determine the fee that I might pay as a renter every month? Is it based on my credit score because if I'm behind on the rent in the first place, going to a new place, my credit score is going to be-- [BLOWS RASPBERRY]

PARAAG SARVA: Yeah, both great questions. You know, in the first one about-- I really view my job and the central part of my job as being an educator. And what I mean by that is, we've been bringing this technology and this new type of insurance to what are over 40 million homes across the country over the last few years. And so it's really through partnership with landlords and property managers to bring this information to them that there really is a better way for them too to transact than having to deal with a cash security deposit.

And so it's in coordination with those landlords and property managers to educate them on what Rhino is and how security deposit insurance works and that it actually benefits them as well as giving renters an option at move in.

And as far as pricing goes, our job and my vision is really to make this as affordable as possible for every single renter in the country. There's 110 million renters today. And that's only increasing in scope and scale as we kind of move through time.

And so we do collect a few pieces of personal information from a renter. And we try to use every bit of that, including credit information, to make it as low and affordable as possible. And that's to say that if you're in San Francisco renting a very expensive home or in Los Angeles versus somewhere else where it may be a lower cost of housing, we want to be able to charge a more competitive right-sized price for that renter in the different market also.

ADAM SHAPIRO: Well, this is a follow up to that. I'm still trying to understand why it makes sense for the landlord. I imagine it's because their exposure is covered. But I'm looking at a chart from S&P Global Market Intelligence in which they're saying-- and they're looking at multifamily REITs-- that the payments, that rent payments, they've fallen, but they're still well above 95% as to what they were a year ago. So does that tell you what, that there's a problem out there? Or perhaps there's a solution that you're offering that might not be facing a real problem?

PARAAG SARVA: Yeah, it's actually a great point. And I think it's this very common misconception that the status quo has everything solved perfectly. What we really do-- and I can speak to this firsthand as a landlord and an owner for many years now-- is that security deposits are not the most efficient way for someone to protect someone for something that may or may not happen in the future. That really is the definition of what insurance is.

And so for decades and decades now, owners have been collecting cash security deposits, only to put them into these very antiquated, stuck in time lease security deposit accounts, which administratively are very burdensome for move ins and move outs. And oftentimes, a renter ends up having to wait 30, 60, 90 days if you're even going to get that money back.

And so this is a product that really brings efficiency to the entire leasing workflow for landlords and property managers and really prioritizes the renter experience. And I think that's really what's been highlighted over the past year with COVID-19 and all of the related issues that it's created is that it's really about putting a renter first. And so the number of times we hear from our customers when they're purchasing a Rhino policy that they didn't even know that this was available, that's really where the aha moment is, is that it's really a new option that previously wasn't available for them.

SEANA SMITH: Paraag, just real quick, who is your core customer? Is it millennials? Is a gen Z? Or does it scale across all ages and demographics?

PARAAG SARVA: Yeah, that's a great point. We definitely, just like all things, hit very squarely with millennials and the younger generations. I'd say about 80% of our renters are under age 40. And that's one of the really interesting things not only about renting but about the ability to think forward about how can we continue to create value for renters on an ongoing basis. Just the nature of who that customer base tends to be a little bit younger.

And so if you think about-- we often hear this story about our customers who have some 30-odd thousand dollars in student loan debt that are moving to a city and getting their first entry level job and then having to deal with all of the life expenses around moving into a new home, only to realize that a security deposit is another $2,000, $3,000, $4,000, or $1,200. It's a huge amount of money at a time where millennials in particular don't have it.

SEANA SMITH: All right, Paraag Sarva, CEO of Rhino, we really appreciate you taking the time. Thanks for joining us today.