Smart home devices and property technology are grabbing the attention of both landlords and tenants. Homes with smart devices enhance the tenant experience, increase security, and may even improve cash flow with higher rents.
To show how smart tech can help to grow rents and improve tenant retention, Stessa has put together your landlord’s guide to smart home devices.
What is smart home technology?
The acronym “Smart” comes from “Self-monitoring, Analysis, and Reporting Technology”.
Smart technology and devices have been around for years, although many people may not realize it. Programmable coffee makers, Google search engine, cars with GPS and cruise control, iPhones, and Amazon Alexa are all examples of smart devices that we use every day.
Smart home technology is an umbrella term that describes devices that use the internet of things (IoT) to communicate, share information, and work together to make life easier for tenants and landlords.
Smart devices found in today’s homes include adjustable thermostats, security cameras, door locks, digitally capable appliances, lighting and music systems. They’re smart because they can be controlled and monitored remotely using a smartphone, laptop or tablet, and even voice commands.
Benefits of smart home devices
Demand for smart home devices is growing so fast that experts have coined the term IoRE – or internet of real estate – to describe the booming market in smart home devices. Over the last few years the market has doubled in size from about $44 billion to $91 billion and is expected by hit $158 billion by 2024, according to data from Precise Security.
Perhaps the biggest reason why so many rental property investors want smart home devices is because of the benefits they offer.
Benefits to landlords
- Better building security in common areas, built-in motion detectors, two-way video communication, and smart locks to track entry and electronically change the lock in seconds
- Smart sensors connected to the IoRE immediately send alerts for broken windows, plumbing leaks, radon and carbon monoxide before maintenance issues spiral out of control
- Energy costs can be monitored and contained with smart thermostats and lighting systems, and save time and money during unit turns and property showings
- Smart irrigation systems can monitor weather patterns, soil moisture content, and outside temperatures and humidity and automatically adjust landscape watering use accordingly
- Singles starting-out, young adult roommates, and perma-renters make up 66% of today’s renters, according to the National Apartment Association (NAA)
- These are the tenants who have grown up with the internet and expect smart homes to be the rule and not the exception
Another benefit of smart home devices for landlords is that they can be treated as one-time or capital expenses.
That’s why Stessa’s Transaction page is so popular with rental property owners. You can create a schedule to see all of your projects in one place and help prepare for tax time.
Will tenants pay higher rent for smart home devices?
Every real estate investor wants to see a return on his or investment, so it makes sense to ask if tenants will pay more rent for homes with smart devices.
The answer seems to be “Yes!”, although how much depends on the demographic you’re renting to and the smart home devices and amenities offered. Investors with mid-range rental property may see the biggest ROI on smart home devices because it’s a feature that helps property to stand out and can draw tenants to vacant units.
A recent survey by Multifamily Executive found that over 75% of renters would accept an increase in monthly rent of $20 or more in exchange for upgraded technology and smart home features. Tenants say they place the biggest value on smart home features that provide them with awareness and peace of mind.
For investors renting to millennials, the potential increase in rental income could be even higher. When smart lock company Schlage conducted a nationwide survey of multifamily renters, the company discovered that 86% of millennial renters were willing to pay more for a smart dwelling.
Best smart devices for landlords to install in rental property
Smart home devices generate incremental revenue and also help reduce operating expenses. Thanks to booming product demand and technological improvements, the prices of smart home devices are much more affordable than just a few short years ago.
Here are seven of the most popular smart home devices for landlords to install in rental property:
- Smart door locks and keyless entry systems operated by smartphones or the IoRE run between $100 – $200
- Smart thermostats that learn frequent settings and adapt and adjust temperatures when no one is home start at $100 or less
- Smart security systems with motion detectors, night vision and 2-way audio connected to Google or Alexa begin at $25
- Smart smoke and carbon monoxide (CO) detectors can send alarm notices to your smartphone anywhere in the world, with prices at around $120
- Smart electric plugs and light switches are sold by the 4-pack with prices starting at just $30
- Smart coffee makers may seem trivial, but can seal the deal with picky renters, and have starting price points of below $100
- Smart garage door opener with smartphone app control compatible with Alexa and Google frequently go on sale for less than $30
Tenants are attracted by the safety and convenience that smart home devices offer, and most are willing to pay a higher rent. Rental property is more attractive, tenant retention is higher, and investment yields are potentially greater.
Rental property investors monitor the performance of their real estate investments with Stessa. By accurately tracking income and expenses you can be sure you’re receiving the greatest benefit from your smart home devices.
Saving a dollar here and a dollar there with smart home devices can generate big cost savings and higher property values.
- Smart = Self-monitoring, Analysis, and Reporting Technology
- Internet of things (IoT) and the internet of real estate (IoRE) are the backbone of smart home technology
- Market for smart home devices is projected to reach $158 billion in the next few years
- 75% of renters are willing to pay a higher rent for places with smart home devices
- Cost of smart home devices starts at just $25