Using Smart Technology to Boost Rental Property Value
What is a Smart Home?
Smart Home is a term that encompasses a growing number of devices designed to communicate, share information, and work collectively to make household tasks easier and more efficient. The term “Smart Home” refers to the devices, the technology that allows them to interact, as well as the networks that tie them all together.
Smart home technology allows users to receive alerts and updates about what is happening in the home. There are options for adjusting thermostats, lights and music. It also makes it possible to monitor security cameras and sensors, lock and unlock doors and perform a multitude of other tasks remotely using smartphones, PCs and even voice commands and alerts.
Why Should You Incorporate Smart Technology Into Your Rental Home?
Adding smart home technology into your rental homes and apartments can make your properties more attractive to tech-oriented tenants. It can also help you monitor and maintain your properties.
Over 43 million homes in the United States are renter-occupied.
That number continues to rise as younger generations increasingly choose to rent instead of buy. According to The Washington Post, the millennial generation is now the largest in history. Reports have stated that millennials outnumber baby boomers by 11 million.
This generational shift is having an impact on the market for rental properties and housing in general. According to Goldman Sachs, not only do 60% of millennials choose to rent, 62% of those that plan to move in the next three years, say they will look for another rental property as opposed to purchasing.
The steady stream of prospective tenants flooding the market provides landlords the opportunity to place long-term, high-quality tenants in their properties. The interest in smart technology is growing exponentially, especially among younger renters.
Growing up in the digital age, millennials have vastly different priorities, expectations, and values than those of previous generations. They are accustomed to instant gratification. They prioritize flexibility and convenience is key, especially in their living spaces.
According to MarketsandMarkets industry research paper, the smart home market is expected to grow from USD 76.6 billion in 2018 to USD 151.4 billion by 2024, at a CAGR of 12.02%.
Smart home technology is easier than ever to install with a plug-and-play format and home automation hubs set up through your internet service provider.
Smart Home Solutions to Boost Rental Value
The hub is the central control device, or the heart of a Smart Home network. It enables various smart devices to work together, and acts as the command center where you trigger actions across the Smart Home by using voice commands, clicking on a display screen, or controlling it remotely using your smartphone. If you have already installed Wi-Fi in your building or rental unit, a smart speaker can serve as a hub that connects a wide variety of smart devices. Every platform is limited to devices that are compatible with its standards. Choose the platform that you are most comfortable with and choose add-on devices that are compatible with it.
A smart lock replaces standard mechanical deadbolts. Tenants can swipe their smartphones or enter a PIN on a keypad to enter the property. Several smart locks offer a logging function that can track when the lock is opened, and by which authorized user(s). Others even go so far as to offer the option of creating temporary “keys” that function only for a select period. This makes it easy to allow contractors and service technicians access to a unit during authorized hours, using their phones.
Landlords can change access codes as desired or needed, when tenants turn over, or in case there is ever concern a key-enabled phone or PIN has been stolen. It takes just minutes to change the access code without the costly expense of a locksmith for new renters or lost keys. Tenants and landlords can also lock and unlock the door remotely via voice command using a smartphone to grant access to delivery persons, painters, pet-sitters, etc.
The price difference between a smart lock and a traditional deadbolt may seem steep at first glance, but the convenience of providing remote access, as well and the time and money saved changing locks between tenants can make up the difference rather quickly. Smart locks would be a good first step in incorporating technology into an apartment or rental home.
Integrating security cameras into tenants’ doorbells could offer them greater convenience, as well as improve security on your property. But unless you think they can help prevent theft or vandalism (and can be installed in places that don’t encroach on tenant privacy) other security cameras aren’t likely to be big selling points with potential renters.
If you install security cameras, you should make it your policy to assure your tenants that you won’t access their units, listen in on intercoms or use camera footage, lock-entry logs and other data unless they request it, or there’s a reason to suspect theft, vandalism or the like. Let them know you will notify them in writing if that’s the case, which is a requirement in some areas. You will want to formalize these policies in a document that is consistent with local laws. A rental management company will be familiar with the most current laws in your area.
Energy Efficient Upgrades
The average annual energy cost for a typical single-family home comes in at $2,200, between heating and cooling costs, appliances, lighting, and electronics. Modern tenants, especially millennials, are interested in homes that take sustainability and energy efficiency into consideration. When you can help tenants decrease these costs, you give your property a competitive edge.
For common areas, like entryways and hallways, consider smart LED lightbulbs. They use far less energy than fluorescent or incandescent bulbs, especially when you consider their programmability. LEDs also emit less heat and reduce the risk of fire from interior lighting. Smart lighting pricing begins at about $70 for white-only bulbs. The price increases if you want more bulbs or if you want colored bulbs.
If you control the heating in your rental properties, smart thermostats can help reduce waste, and allow you to precisely control temperature based on usage, weather patterns and time of day. If you do not control the utilities, smart heating and cooling capabilities in the home can be a big selling point for your property. 30% of renters consider energy efficiency to be an important consideration in choosing a rental.
Another option is to install an energy monitor. These devices attach to the circuit breaker inside a home and monitor energy expenditure on a room-by-room basis. It can be a valuable way to identify which rooms are using the most energy. It can also help pinpoint faulty wires and other problems before they worsen.
Systems that adjust lights and temperature throughout a home can bring significant savings. A/C units and heating systems consume a lot of energy, and that cost impacts the value of your rental. These features can be controlled remotely via the Internet and tenants like the confidence of knowing appliances are turned off.
How Does Smart Technology Help Rental Property Owners?
You may think that smart home technology is primarily designed to cater to the people who live in the home or apartment. Implementing connected devices in your rental units is not only attractive to potential renters, it can also help you efficiently manage your properties and increase your ROI. Smart Home automation can improve security and energy efficiency in rental units both when they are occupied and when they are on the market or between tenants. In multi-unit buildings, smart home automation also can help manage common areas such as lobbies and laundry rooms.
The Bottom Line
Technology has entered almost every aspect of our lives. While many property managers are enjoying the convenience of high-tech property management software, research shows that tenants like tech amenities too, and they are willing to pay more for them. In fact, 1 in 4 said they were willing to pay an additional $30 or more per month. If your goal is to attract high-paying tenants, while avoiding costly turnover, it might be time to consider incorporating smart technology into your rentals.
A secure and energy-efficient rental property can save energy costs for both you and your renters, as well as provide peace of mind and eliminate hassles. Working “smarter” not harder may set your properties apart from the competition.
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