The “Internet of Things”
Paper maps. Phone books. Burning songs to CDs. Board games. Payphones. Coin-operated parking meters. Newspapers. Checkbooks. All of these are going, going, gone! Replaced by technology.
Going paperless and living online is not just a millennial thing! Look around you. Whether you’re an owner/operator or a supplier, technology is rapidly changing the residential rental industry. Five years ago, no one thought it was possible to complete the entire leasing process (from initial inquiry to signing the lease) without the resident seeing the unit or the landlord having a face-to-face meeting with the tenant!
If you’re shocked, you shouldn’t be. Technology makes owning and operating multifamily rental property more efficient and more profitable. Technology is something to explore, embrace, and enjoy.
Let’s start with the Internet of Things (IoT) or Smart Home technology. It’s a concept of everyday objects – from industrial machines to wearable devices – using built-in sensors to gather data and act on that data across a network. In short, IoT links objects to the Internet, enabling data and insights never available before.
In 2016, Coldwell Banker Real Estate and CNET announced their official definition IoT for those in the residential real estate business. They defined it as:
“A home that is equipped with network-connected products (aka “smart products,” connected via Wi-Fi, Bluetooth or similar protocols) for controlling, automating and optimizing functions such as temperature, lighting, security, safety or entertainment, either remotely by a phone, tablet, computer or a separate system within the home itself.”
For the multifamily industry, across different asset classes (A, B, C, student, senior, affordable, etc.) IoT/Smart Home technology is expanding at a steady rate. Based on latest information from NAA and NMHC, 62% of apartment owners/operators defined their IoT initiatives as basic at this time (focusing on thermostats, smart locks, lighting, and online payments); 31% said no IoT yet; and only 8% are very advanced with systems that integrate into property management software.
Retaining and attracting better residents is the primary motivation for multifamily owner/operators to invest in IoT/Smart Home technology. Increased operational efficiencies, reduction in utilities, key replacement costs, and ancillary revenue are additional reasons multifamily owners consider IoT/Smart Home.
Asset managers want to know the ROI of technology expenditures. To recapture the hardware and software expenditures, 47% of owners/operators incorporate IoT/Smart Home installation and operational costs into rents; 22% charge a technology fee in addition to rent, and 20% do not charge. Interestingly, 84% of surveyed residents indicated they would pay $25 – $50 per month for smart devices in their unit. Apartment owners/operators expect IoT/Smart Home to generate positive ROI and NOI.
Like most new initiatives, IoT / Smart Home has its challenges: cost of implementation, measuring ROI, fear of technology being out of date ‘future-proofing”, training staff, and supporting the devices. Even with these potential obstacles, 54% of multifamily owners/operators are planning to roll-out IoT/Smart Home initiatives or ramp up trials in 2020, and 46% are researching partner options to support an IoT/Smart Home program. If you are considering initiating or expanding your IoT/Smart Home program, begin by surveying your residents. One way to do that is to test out systems in your models. Invite current and future residents to try out the various Smart Home features of your community.
Residents desire the basics: the ability to remotely control thermostats, security cameras, lighting, and door locks with the primary goal of making their lives easier and more efficient. Saving money on energy and helping the environment are a bonus. Safety and privacy are significant resident concerns as residents do not want their data sold to companies without their permission. Onsite staff needs to be prepared to explain to residents how their personal data is stored and transferred.
If you’re going to implement IoT/Smart Home features without a technology partner company, have your maintenance staff purchase and install (DIY) keyless/coded locks, smart thermostats, light switches, water sensors from Home Depot, Loews, etc. They can leave the leave basic instructions for residents. The DIY challenge comes with resident turn-over. Be sure to have a plan on when and how to manage the factory reset on everything so past residents can’t access the system.
I recommend that you use a technology partner when initiating IoT/Smart Home systems. Currently, there are more than 18 NAA member companies that provide IoT/Smart Home support. Things to ask when considering a partner-supported option:
- How old is your company?
- How many sites installed?
- Who owns the equipment? If free then what happens if you sell?
- How do devices connect to the cloud?
- Wifi broadband provided by site or residents?
- Security of data: how do they host, and how secure is it?
- How do the onsite staff and residents control the devices?
- Who supports resident calls?
- What about the Manufacturer’s warranty/certification for multifamily?
Just a few fun facts: Maintenance staff reported saving three hours a week chasing keys for Work Orders- 30 minutes for every re-key done; Accountants have documented average savings of $34 per year for each unit with vacant temperature setting; Monitoring of utility usage or unsafe conditions (e.g., water leaks). Property in San Antonio had 15 major leaks on top floors last year–notifications are preventing them now. History of Codes- If the resident is generating 5+ new codes a month, you know they are renting on Airbnb!
Below is a list of resources to learn more about IoT/Smart Home.
NAA Article: Henry Pye RealPage consultant
NAA Article: Smart as we Think?
NMHC- SmartTech Pays Off for Multifamily
NAA Article on Maintenance Impact
6 Questions Developers should Ask:
Ring Doorbell/ Wifi weak security
Debbie Kimball is Senior Account Manager at PointCentral. You can contact her at (817) 800-8082 or firstname.lastname@example.org