Renting as a lifestyle choice, particularly among millennials, is driving the demand for smarter, greener properties differentiated by the amenities they offer. The lines are increasingly blurred between the expected features of short-term rentals and that of real estate, raising the bar for what a new listing needs to offer to stand out. For management companies and property owners, there’s an opportunity through home automation to increase rental value. Is it worth the expense? The more pertinent question might be whether you can afford not to. Here’s why home automation delivers consistent ROI.
The Challenge Today’s Management Companies Face
The national average rent has increased by 36% since 2010 but any outrage has been tempered by a changing attitude toward the perceived value of renting. Millennials now represent the country’s largest generation, and they are more likely to delay purchasing a home compared to their predecessors. One reason is that renting offers the pick of downtown locations and inventory. As services like Airbnb have disrupted the short-term rental market, renters have become accustomed to hotel-style services and amenities. There are more high-earning renters ($150k+) than ever before and they’re not looking for somewhere to crash, but somewhere to flourish.
At the top of the wishlist is smart amenities. Some 34% of US households own at least one smart home device and the rise of remote working has seen interest spike in smart lighting and enhanced security systems. Property managers and management companies must be sensitive to that demand. Given that by 2019 the demand for smart home devices had grown by 26.9%, according to the International Data Corporation, there’s a risk in treating home automation as a nice-to-have. In 2021 and beyond, it’s a must-have.
Attracting Higher-Paying Renters
One study found that 86% of tech-savvy millennial renters would pay higher rent for smart features. And before we stand accused of joining the obsession with millennials, it’s worth pointing out that, in general, 46% of consumers think it’s important for their next home to have smart technology. This is no fad. Today’s young, remote-working renter (two-thirds of today’s renters are singles starting out or young adult roommates according to the National Apartment Association) isn’t prioritizing a parking space or quick commute into the city in their search for an apartment. They are looking for features and amenities that allow them to work smarter and enjoy greater flexibility. They might not use hotels for short-term trips, but they expect hotel-standard amenities and concierge-like communication as rental features.
How Home Automation Can Save Money
So far, this might look like a lot of additional expenses for the management company, but there is enough evidence to support the claim that investment in home automation delivers returns. Consumer reports show that smart automation can add .5% to property value at resale, and can significantly decrease time on market by showcasing standout features that other properties on the listings lack. There’s no need for concern either about investing in technology that will soon be obsolete. The global home automation market is already worth more than $60 billion, and is set to grow by 8.7% in the next five years.
Savings on Running Costs
Management companies can also recoup costs through home automation through a greater focus on efficiency, energy-saving and business intelligence.
- Keyless technology cuts the costs of managing viewings, deliveries and access.
- Water alerts, HVAC monitoring and smart thermostats can save 10% to 15% off monthly energy bills on average.
- Lower management costs through predictive maintenance and increased property awareness.
- Data-backed insight on customer behavior and preferences allows for better forecasting.
We’ve all had to reappraise what the home means since the pandemic. Is it a place to work, a place to relax, or can it be both? Automation through AI and IoT smooths over a lot of the unknowns, offering an intelligent solution to human challenges. On the evidence, it goes further than covering initial investment costs. Where rental is concerned, home automation is a key value driver.
Sources:
Forbes – How Automation Technology Is Changing Property Management
Forbes – Demand Heats Up For Smart Home Technology In The Rental Market
PwC – Smart home, seamless life Unlocking a culture of convenience
Realty Times – Home Automation Could Be Your Key To Selling Quickly
