It doesn’t pencil out. Or does it?
The mantra that used to be associated with smart home technology in multifamily was that it was nice, but wouldn’t have a return on investment. However, with growing demand and more residents coming to expect their apartment homes to be fitted with smart home technology, that mantra has begun to shift toward a more fitting question: How do we maximize asset value and revenue on smart home technology?
The answer seems simple: Smart Home as a Service (aka the new SHaaS). Residents pay a monthly fee for the smart home service, apartment owner/operators make some ancillary revenue and the smart home companies offer 24/7 customer service on the devices.
As much as we’d all like it to be that simple, it isn’t. We all know being in the residential service industry that residents are picky and multifamily housing is complicated. That’s why there’s a significant difference in both asset value creation and monthly fee depending on the smart home technology you install. Asset value increase from the installation of smart home technology can range from $745,000 to $1.1 million, while the monthly fee residents are willing to pay ranges from $10 to $50, depending on the quality of the smart home system.
The kind of resident who wants smart home tech, doesn’t just want any system, especially if they’re paying for it as a service. They want the best smart home system money can buy. They want every device to be interconnected and work seamlessly, a hub to manage all of their devices, stringent cyber security and 24/7 customer service.
What residents are willing to pay reduces with each missing piece of the puzzle. That’s why apartment owner/operators can only charge $30 a month for a less robust system, resulting in an NOI of just $22. More robust systems command $50 a month and produce an NOI of $33 a month.
But resident preferences aren’t the only consideration when attempting to maximize asset value and NOI with smart home technology. Maximizing these two elements also requires operational efficiency and technology that protects the asset.
Systems that offer centralized control of smart home devices of vacant apartment homes not only empower you to save on utility costs, but also make your maintenance teams more efficient. For example, if a painter cranks up the AC in a home because they get warm and need airflow, chances are they’ll forget to turn off the AC. Your smart home system should allow you to adjust the temperature from a centralized dashboard.
This also means you don’t have to ask your maintenance techs to check the thermostat after the painter leaves to ensure it’s at a reasonable level. Maintenance techs have much more important inspections to do regarding the painter’s work than the AC.
This certainly prevents a community from losing money in utility costs, but there’s another big expenditure that can be avoided with smart home tech – water damage from undetected leaks. Leak detectors are a critical component of any smart home system because they help prevent nasty apartment floods that intrude on other apartment homes. In fact, it’s estimated by Pure Insurance that floods from non-weather-related events costs the industry $50 billion annually.
With leak detection saving that much money, centralized control, premium installations of robust systems designed with sleek and intuitive hardware combined with the responsive service levels residents expect, you can not only make smart home pencil out, but also maximize asset value and NOI.