Smart home technology is quickly becoming a standard amenity in rental properties nationwide. More and more renters want to lease units with smart devices, such as smart locks and smart thermostats.
According to a recent survey, 82% of renters expect at least one smart home device on a property. While 61% of Millennials are likely to rent an apartment specifically because of a smart technology amenity.
In response, managers are feeling competitive pressure to upgrade their properties with smart technology to attract renters. According to the 2020 Phocuswright Report, 46% of property managers have already incorporated some type of smart technology into their property.
So, how do you know if a smart home technology upgrade is right for your property or worth the investment?
To be Smart or Not
First, let’s define what makes a home “smart.” The most popular devices that create a smart property are keyless locks, video doorbells, smart thermostats, smart lighting, motion sensors, and leak detectors.
Each smart home device has its own set of features that add value to properties in different ways. Some improve a property manager’s operational efficiency; some generate new revenue; others enhance the resident experience; and some do all of the above.
Managers should consider the unique attributes of their property when deciding if smart home technology can benefit their property.
Smart Home Streamlines Property Tours
Managers should ask themselves whether their properties have specific operational challenges that could be resolved through a smart home technology upgrade.
For instance, properties with high turnover rates and properties with a large number of units usually require more frequent showings.
Since managers are usually busy juggling many responsibilities, the less time they have to spend onsite for tours, the more time they have to accomplish their operational checklists. Therefore, managers benefit from a smart technology solution that gives them the flexibility to quickly prepare any unit for a self-guided tour.
Smart locks are the easiest way to create a secure property access solution for self-touring. Smart locks only require a one-time installation and make every unit “tour-ready.” Thus, eliminating the need for managers to constantly move physical lockboxes from one unit to another in preparation for tours.
By eliminating the need for keys to access a property, smart locks streamline property tours. Most renters actually prefer to tour on their own and smart locks impress prospects by giving them a preview of future smart home living.
Eliminating keys is also a cost benefit since there is no longer a need to re-key after every unit turnover.
Upgrading properties with smart access technology is a win-win for renters and managers alike.
Smart Home Helps with Asset Protection
Another type of property that could benefit from smart home technology is an older property that is prone to leaks that may lead to expensive water damage. Smart leak sensors are often the difference between a small problem and a costly one.
Similarly, smart thermostats can monitor the performance of HVAC units. If managers detect unusual fluctuations in utility costs from one month to another, they can easily identify which unit is responsible and replace the associated HVAC system.
For properties that require many visits by maintenance vendors, keyless entry benefits managers by enabling them to create durational access codes that allow access to a property without a manager’s presence onsite.
Properties with shared amenities, such as pools and gyms, also benefit from smart home technology, such as a common area access panel. Smart access panels allow managers to create schedules that allow residents, guests and staff to enter a common area only during specified times. An added feature for managers is the generation of activity logs which show who accessed a common area and when.
As you can see, smart home technology is a good solution for properties with a variety of operational challenges.
Smart Home Increases Revenues
Smart home technology is also ideal for properties that were built for their revenue-generating potential.
In fact, managers of “A-Class” properties know that renters expect smart home devices in most top-tier properties where residents focus more on their resident experience than rental rates.
The luxury offered by keyless entry, and the ability to remotely control and schedule unit temperature and lighting with smart devices, is a great way to showcase property value and attract high income residents.
Similarly, even managers of mid-tier properties find that adding smart technology to their units allows them to increase income.
The new generation of tech-savvy renters are willing to pay on average $37.65 more in monthly rent to have smart amenities. Therefore, managers can quickly recoup an upfront investment in smart home technology and upgrade their properties at the same time.
Similarly, renters understand that any rental increases are quickly offset by the potential to save 30% in annual utility costs. So, again, smart technology proves to be a win-win for both managers and renters.
Rently’s data shows that smart communities have 3x as many tours as non-smart communities. They also convert at a 13% higher rate.
Smart Home Increases NOI
Another revenue enhancement for managers is the potential for smart home technology to enhance net operating income (NOI).
NOI is defined as revenue generated from the daily operations of the property minus the operating expenses. The lower a manager’s expenses, the higher their revenue.
Smart home technology can help managers avoid surprise property expenses that upset their annual balance sheets.
For instance, by adding smart sensors, property managers are alerted to problems before they become costly damages. On average, properties see between 4-5 leaks every year. And, if not detected early, leaks can result in an average cost of $12,000 to repair. Thus, managers can save between $48-60,000/year in surprise charges simply by installing smart sensors.
Every property manager must come to an informed conclusion about whether an investment in smart home technology is beneficial. And, some properties will benefit more than others.
However, it is safe to say that any level of investment has positive, long-term operational and financial ripple effects. Smart home technology optimizes the financial equation for both managers and renters of most properties.