2026
Rhino Security Deposit Alternative vs. Captive SDA Programs: Where Does the Profit Go?
Rhino is one of the best known security deposit alternative products in multifamily. Instead of paying a large cash deposit at move-in, a resident pays a small fee for a surety bond that covers the property against unpaid rent and damage. Rhino says its policies start at $4 a month, with pricing based on the deposit amount, the resident’s risk profile and the market. In February 2025, Rhino and Jetty announced a merger.
This post compares a Rhino security deposit alternative with a captive SDA program, with a focus on where the underwriting results go.
How a third-party SDA model typically works
The resident pays a monthly fee instead of tying up cash in a deposit, typically in the range of $5 to $25 a month depending on rent and coverage amount. The provider and its carrier or surety partner hold the risk, and when a resident leaves owing money, the property files a claim. Underwriting results stay with the provider. In some configurations, operators receive a revenue share, often a few dollars per enrolled resident per month. That is the general model for the category; your agreement sets the actual terms.
Why SDA economics are attractive
The covered events, damage or unpaid rent beyond normal wear and tear, are relatively infrequent in professionally managed portfolios. Loss ratios for SDA programs in well managed communities typically run in the 15% to 30% range. That is why it matters who the results belong to.
How a captive SDA program works
In a captive structure, residents pay the same kind of monthly fee and operators get the same protection against damage and unpaid rent. The difference is that SDA premium goes into a cell you co-own, claims are paid from it, and what isn’t spent on claims comes back to you at year end. To learn the basics, read our explainer on the security deposit alternative.
Side by side
Coverage for operators: damage and unpaid rent protection in both.
Resident experience: no upfront cash deposit in both.
Monthly fee: commonly $5 to $25 depending on rent in both.
Claims: handled by the provider in a third-party model, by the captive administrator in a captive.
Underwriting results: to the provider and carrier in a typical third-party model, back to you in a captive.
The math (illustrative example)
Take a 300-unit property with 255 enrolled residents at an average SDA fee of $18 a month.
Typical revenue share at $5 per resident per month: $15,300 a year
Estimated captive distribution at a 20% loss ratio: $38,000 to $42,000 a year
Annual difference: $22,700 to $26,700 per property
Five-year difference with 5% annual growth: $125,000 to $150,000 per property
These figures are illustrative, not a quote. When SDA runs inside the same captive as resident liability, both lines feed one cell. Our programs have consistently averaged 75% to 93% resident enrollment over time, and an enrolled base like that is what makes combined lines worth the effort.
The regulatory angle
SDA charges written into leases as flat fees face more scrutiny under junk fee rules than regulated insurance products with defined coverage terms and state oversight. A captive SDA program is regulated insurance, which gives it a clearer footing as fee rules tighten.
When third-party SDA makes sense
Third-party providers like Rhino offer a turnkey product with well known branding and strong resident awareness. For small portfolios or operators who want no administrative involvement, that can be the right call. As SDA volume grows, especially alongside a captive resident liability program, the economics favor ownership.
How Insur3Tech fits
Insur3Tech’s captive has no minimum premium and no unit minimum; portfolios as small as 4 doors can join. There are no holdout periods. The entire program is reinsured, so you carry no downside risk. What isn’t spent on claims comes back to you. We insure 100,000+ doors.
Using a third-party SDA today? Book a free discovery call. We’ll audit your portfolio for free and tell you how much you can expect to get back every year.
