Innovation in Risk Management: Lighthouse's Deposit Alternative Solution

Written by:

Steve Marcinuk

Date:

02 Jan 2025

Share

Share via Facebook

Share via Linkedin

Share via X

Copy to clipboard

As property managers navigate rising vacancy rates and increasing move-in costs, Lighthouse is redefining the traditional security deposit model. Founded in 2020 by industry veterans who understood firsthand the complexities of deposit management, the company has developed an alternative that’s gaining traction among portfolio managers nationwide.

For Co-Founder, Taylor Malkus, Lighthouse’s journey began after five years at property management software giant Buildium, where he advised everyone from accidental landlords to institutional investors with thousands of units under management.” When approached by now-business partner and CEO Tomer Simonov about addressing market gaps, Malkus recognized an opportunity to solve a persistent industry challenge affecting both operators and residents.

Traditional security deposits create operational complexities for property managers, including state-specific regulations and potential legal liability. Meanwhile, rising move-in costs increasingly impact occupancy rates. “The last time I rented in Boston, it was almost $14,000 just to get in the door,” Malkus explains. “That was for a modest one-bedroom – first month’s rent, last month’s rent, security deposit, and broker’s fee. It’s only gone up since.”

Lighthouse provides coverage for standard security deposit items – loss of rent and damages beyond normal wear and tear – while eliminating risk for property managers and making move-in costs more competitive for renters. The company underwrites residents for the required coverage amount, up to 2x Rent, and is paid for directly by the renter. Property managers can offer this optional benefit alongside traditional cash deposits, maintaining strong asset protection while providing payment flexibility.

Their post-occupancy approach breaks from industry norms. Rather than charging interest on damage reimbursements, they offer deferred interest plans to make move-out expenses manageable. This structure helps property managers maintain positive relationships with outgoing residents while ensuring proper compensation for damages.

For operators facing increased vacancy rates, Lighthouse offers solutions like their deposit booster program, where residents can combine a traditional cash deposit with their coverage. “Property managers are reporting vacancy rates way above targets, causing friction with owners,” Malkus notes. “We’re helping them stay competitive without compromising on financial security.”

Early market response has been compelling. Working selectively with established property managers who maintain strong online reviews and focus on long-term resident retention, Lighthouse has validated their model’s effectiveness and ease of implementation.

“The documentation required for coverage claims matches what property managers already provide renters during move-out,” Malkus emphasizes. “There’s no additional process to learn or implement.” This seamless integration has contributed to strong adoption rates among early partners.

Building on this momentum, Lighthouse is expanding through partnerships with the National Association of Residential Property Managers (NARPM) nationwide. By attending monthly chapter meetings in-person throughout the country, the company is focused on educating the market about their proven solution. 

As the industry continues seeking ways to optimize occupancy while maintaining strong asset protection, Lighthouse’s validated approach demonstrates how innovative financial products can enhance traditional property management operations.