Adam has something a little different to share with us today. We’ll hear about Rhino, a company that helps investors and renters skip large security deposits by having the tenant pay a low monthly fee. If you enjoyed today’s episode remember to subscribe in iTunes and leave us a review!
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“It’s all about hiring smart, driven, hungry people” – Adam Weiner
Adam Weiner Real Estate Background:
- Managing Director at Rhino, replaces security deposits with a low cost insurance policy
- Joined Rhino as employee number 5, now leads a team of 8
- Rhino was recently featured in the New York Times: https://www.nytimes.com/2019/10/02/nyregion/apartment-security-deposits-nyc.html
- Based in NYC, NY
- Say hi to him at https://www.sayrhino.com/
- Best Ever Book: War Journal
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Theo Hicks: Hello Best Ever listeners, and welcome to the best real estate investing advice ever show. I am Theo Hicks. I will be hosting today’s show, and today we will be speaking with Adam Weiner. Adam, how are you doing today?
Adam Weiner: I am doing good. How are you doing, Theo?
Theo Hicks: I am doing fantastic, thanks for asking. I am looking forward to our conversation. A little bit about Adam – he is a Managing Director at Rhino which is a company that replaces security deposits with a low-cost insurance policy. He joined Rhino as employee number five, and now leads a team of eight other people. He is based out of New York City, New York. You can say hi to him at www.sayrhino.com. Alright Adam, before we get any further, do you mind telling us a little bit more about your background and what you’re focused on now?
Adam Weiner: No problem. Thanks for asking, Theo. A little bit about me – I’ve been in tech sales for the last seven years. I’ve been at companies like Yelp, and Google… For the last four years I’ve been in property technology at a company called Nestio, prior to joining Rhino, and helped build out their business development team seed round through series B, and now I am over here at Rhino where we are changing the way that renters rent, and hopefully change the way that owners can manage their properties.
Theo Hicks: So I mentioned in the intro that Rhino replaces security deposits with a low-cost insurance policy. What exactly does that mean?
Adam Weiner: It’s real simple. Traditionally, when someone gets approved for an apartment, the managers or the owner says “Okay Johnny, you’ve been approved for the apartment. We are going to need a cash security deposit in X amount.” That could be 300 dollars in Texas, or it could be 3,000 dollars in New York City. And what we do is we go ahead and replace that deposit with an insurance policy. So it’s a reduction in upfront cost for the end user, that being your resident, and it will really grease the wheel so to speak with regards to leasing velocity, and your ability to effectively market the apartment.
In essence, we are just cutting out a major bottleneck that prevents people from getting into apartments quickly, to benefit landlords, and it’s a great way to tackle the affordable housing issues by helping people out during what’s a super-expensive time in someone’s life, moving.
Theo Hicks: So when you say it’s insurance policy – are you working directly with renters, or are you working directly with the owners? Or is it both?
Adam Weiner: That’s a great question. We view ourselves as a true B2B2C model. My team’s job is to form partnerships with landlords throughout the United States. And they this in turn offer Rhino as a financial amenity to the renters. So it’s really an equitable equation for everyone involved.
Theo Hicks: Okay, so you said typically what happens is I want to rent an apartment, the landlord approves me, and instead of me paying them $300 — I wish my security deposits were that low. Typically, it was like a month’s worth when I was in Ohio. So I pay $1,200 upfront, plus first month and last month’s rent. That’s like $3,600 right away. Whereas for this strategy, you said that it replaces it with an insurance policy. Does that mean me as a renter rather than paying $1,200 upfront, I am paying something each month, like I would with other insurances?
Adam Weiner: Yeah, you hit the nail on the head. It’s a monthly payment that the renter pays. The general rule of thumb is for every thousand dollars of protection the landlord needs. So to replace your exact deposit, it would have cost you about $5 a month with Rhino.
So, the resident is psyched, because they don’t need to shell out $1,200 bucks in addition to all the other fees – first month’s rent, last month’s rent – and that’s a huge reduction in cost, which benefits the landlord initially. And to your point, $300 [unintelligible [00:05:32].14] in Texas. In San Francisco or in New York City, where we have partners on the landlord side, they are charging resident three, four, upwards of seven, eight thousand dollars in terms of deposits. So it’s really a universal fit for a renter, and depending on socio-economic status, it will vary as to what we’re actually replacing.
Theo Hicks: Okay, and how does the exit process work with the insurance policy? I am a landlord, my tenants lived there for a year, they’ve paid their let’s say $500 per month for insurance, and then they move out. And then let’s say that the damage that I incur is — I don’t know, let’s say 2k. Well, does the insurance policy cover all of that? What will the insurance policy cover? Is there a process for explaining what issues I had, is that different…? Because obviously, if I just take a security deposit, I kind of am the one who’s looking at the property, seeing what damage was incurred, calculating the costs, and then taking that out of the security deposit before giving it back to them. How does the exit process differ with this policy?
Adam Weiner: Yeah, totally. The claims process is really easy. Effectively, we need to be as good or better than cash. If landlords or owners weren’t able to get their money quickly and in a really in an efficient way then no one would be working with us. Right now we are in about half a million apartments, and we’ve ensured upwards of 150 million dollars in leases, for owners and operators throughout the US. So, from a claims perspective, it’s all done digitally online.
We need some photos for damages, for loss of rent or late fees, just a copy of a lease ledger, or arrears on the account. You upload that information with the claim, actual amount, and click Submit. You will be alerted automatically that we received the claim, and then we process that claim in an hour. So it’s very, very fast.
Theo Hicks: Okay, this sounds very convenient for the landlords.
Adam Weiner: Yeah, take car insurance as an example. You go rent a car, and they don’t say, “Hey, Theo, we’re going to need $5,000 to drive the car off the lot.” You give them your information, you take on an insurance policy, and it’s a really effective way to protect the asset. Same exact principle applies to real estate.
Theo Hicks: Taking a step back and looking at Rhino’s business perspective – again, I don’t know much about how insurance companies operate, but you mentioned that you ensure up to about 150 million dollars in leases throughout the US. As a company, do you need to have a lump sum of cash on hand in order to make sure you can cover all of these claims processed? How do you know how much money your company needs to make sure it can cover the potential of 150 million dollars or whatever that number would be? I am just curious.
Adam Weiner: Yeah… Well, it’s called an MGA, which is a Managing Group Agent. So it’s our policy, it’s our marketing, it’s our branding – we handle end-to-end processing of the entire insurance process, from collection of premiums all the way to processing of claims. We operate on carriers balance sheets, so we are backed by a company called State National. State National is a roughly 14 billion dollar A-rated excellent insurance carrier. They basically trust in us to write [unintelligible [00:08:41].01] policies in a way that we find appropriate, and it’s actually them [unintelligible [00:08:45].20] fulfilling claims when landlords file them.
Theo Hicks: Okay. And another business question – it sounds like you joined this company pretty early on. What was the size of the company? …whatever the main metric is. You said that you ensure 150 million dollars in leases now; maybe that will be the metric. How much money worth of leases did you guys ensure when you first started working there?
Adam Weiner: That I don’t have off the top of my head, but to give you an idea, when I started a year ago, we were working in an eight by eight office, with seven of us on a good day. Now we are in a 5,000 square foot space, we are a team of roughly 40. So the company has grown, and that’s really to keep up with the volume and demand of both renters that we service, and landlords that we work with.
So when we started off, we had roughly just south of 100,000 units on the platform, like 50 or 60 thousand, and now we are upwards of 300,000. So we are growing really quick, primarily from an institutional owners standpoint… So a couple of folks on the [unintelligible [00:09:45] and then we work with everybody in between.
Theo Hicks: Okay, so just because this is an insurance company, it doesn’t mean the kind of concepts that are used to scale don’t apply to real estate… Because I could start with me doing everything myself and having a small number of units, to eventually having a team of ten people. So what were some challenges you faced, or maybe the lessons that you learned, that other people can apply if they want to get to the point where they’re not just a one-man show, they’ve got people working for them and that enables them to scale their business? What are some of tips you have for people who want to scale the number of people they have working in their business, so that they can grow their real estate business?
Adam Weiner: It’s all about hiring smart, intelligent, driven, hungry people. Everyone in the office understands what the mission is, we are super-collaborative, and it’s really about hiring A-players early on, and A-players will attract other A-players. So I think the advice would be surround yourself with good people.
Theo Hicks: Do you have any involvement in the hiring process?
Adam Weiner: Yes. I am hiring key people in our business development team right now.
Theo Hicks: Can you give us some tips on what to look for when you are hiring people? I mean, I know you mentioned smart, intelligent, driven people, who are aligned with your mission, but is there any specific tactics that you use when you are interviewing, that maybe is unique to your business?
Adam Weiner: Yeah, I try to have a conversation with someone, rather than ask generic, arbitrary interview questions. I try to really see if a person can connect with me and have a real conversation, and try to learn that way. I think that’s kind of indicative of the way that we approach business development.
Ultimately, Rhino is a free product for landlords, it costs nothing. So my team’s job is to form strategic partnerships with progressive-thinking folks in real estate. So it’s really about doing exactly that – having a conversation, building rapport. I think that’s a huge part of what I look for.
Theo Hicks: You mentioned [unintelligible [00:11:46].16] landlord, so you making money off of the insurance payments that the tenants pay… So part of that goes towards covering the claims or whatever, and the rest of that is profit for you guys, correct?
Adam Weiner: Correct. That’s how the business model works.
Theo Hicks: Perfect. Alright Adam, what is your best real estate investing advice ever?
Adam Weiner: My best advice ever would be if you’re a multifamily operator, to get your apartments off of deposits, and to have them use an alternative like Rhino. I think that’s where the market is heading right now, and the advantages greatly outweigh the disadvantages. The only reason I could think of not using a service like Rhino is if you are in a state that allows you to use deposits for capital improvements. But most states — it’s few and far between that allow that.
Theo Hicks: Perfect. Are you ready for the Best Ever Lightning Round?
Adam Weiner: Yeah, let’s do it.
Theo Hicks: Alright. First, a quick word from our sponsor.
Theo Hicks: Alright Adam, what is the best ever book you’ve recently read?
Adam Weiner: War Journal, by Richard Engel. It’s a history, or conflict [unintelligible [00:13:35].19] It’s very, very interesting.
Theo Hicks: If your business were to collapse today, what would you do next?
Adam Weiner: I’d probably go into brokerage works. I’ve always had a real interest in that, and I’ve never done it… But I’d probably go into the world of brokerage.
Theo Hicks: What deal did you lose the most money on? I guess as you aren’t technically an investor, I guess it could be “What business decision resulted in a loss of money?”
Adam Weiner: When working at a company, the worst deals are deals that hurt the company. The worst deals that I have ever lost were deals that did just that, [unintelligible [00:14:10].20] probability deals.
Theo Hicks: What is the best ever way you like to give back?
Adam Weiner: The best ever way I like to give back is a charity called Shatterproof that I’ve given back to, that helps people who are dealing with substance abuse.
Theo Hicks: And then lastly, what’s the best ever place to reach you?
Adam Weiner: Text or email is the best way. Adam@sayrhino.com
Theo Hicks: Alright, Adam, I really enjoyed conversation. This is one of the first interviews I’ve done in a while where it’s been kind of completely foreign knowledge. I really don’t know anything about the insurance process, and I’ve never heard this before. It was very interesting, and I am looking forward to diving into this more.
Just to kind of summarize what we talked about… Rhino is a company that replaces security deposits with a low-cost insurance policy. So rather than me as a landlord collecting a security deposit from my renter, instead I will partner with Rhino and my tenants will pay a monthly fee instead.
Adam Weiner: You nailed it.
Theo Hicks: And the benefits of that are — both benefits to the landlord and to the renter, because the upfront fees are going to be lower, so I don’t have to worry about losing the residents that can’t afford thousands of dollars upfront. I can lease my units faster.
You also mentioned that from a business perspective your company is backed by a large company called State National – that’s your insurance carrier – that lets your company handles the entire insurance claims process. So if you are working with Rhino, they do the entire process.
You mentioned that the claims process itself is all done digitally, so rather than me having to do all the calculations of myself, I just upload photos, upload copies of leases for any late fees, and then your company calculates how much money it’s gonna cost to cost to fix all the damages.
We talked about how to scale… So when you first started out, you had seven people on a good day, really small office, you managed around 60,000 units. Now you have a big office, 40 people, managing over 300,000 units. The tips were to make sure that you are hiring the smart, intelligent, driven and hungry people early on, who in turn attract more smart, intelligent, driven and hungry people, and you’ve got the snowball effect. So make sure you are focusing on hiring right people early on, that will help you scale long term. More specifically, when you are hiring people to see if they are smart, intelligent, driven and hungry, make sure you are having a conversation with them, rather than asking them a list of generic questions, to see if they can connect with you.
And then lastly, the best ever advice was to get your apartment off of the deposit system and use an alternative like Rhino. The only exception you said would be if they have the ability to use the security deposits for ongoing cap ex, because if that’s the case, you can multiply that money by investing into the property and forcing appreciation.
So yeah great interview, great conversation, lots of great content. Best Ever listeners, I am sure you’ve learned a lot. Thanks for tuning in, have a best ever day, and we’ll talk to you soon.
Adam Weiner: Thanks so much.