There’s no shortage of smart home devices on the market today. Amazon leads the way with its line of Echo devices and Alexa voice assistant technology. Behind Amazon are splinters and segments of other automation technologies—everything from Nest learning thermostats, to August smart door locks, to Google visual assistants and more.
The smart home market is growing every day, which has led many real estate investors to ask: “Should I be updating my rentals?”
To some, smart home tech seems like an unnecessary, flashy expense. To others, it’s an opportunity to ride the wave of a new housing trend. Regardless of your personal position, home automation tech needs to be examined closely for its benefits and opportunities.
Utilizing smart home tech
Smart home tech may have started as a novelty venture, but in a short time it’s quickly become innovative for a wide variety of reasons. It’s less about asking Alexa to turn off the lights and more about raising the efficiency and reliability of a home’s many conveniences.
Smart thermostats, for example, have the power to learn the heating and cooling habits of a home, to better utilize the HVAC system. This not only saves money month-over-month, it reduces stress on furnaces and air conditioning units. In the case of smart door locks, digital codes make it easier for residents to access the home without having to worry about keys. These same locks can also be programmed to automatically lock after a period of time or at a certain time of day.
From smart lighting and doorbells, to cameras and motion sensors, the ecosystem of smart home tech is growing by leaps and bounds. And for good reason! Each new innovation brings with it new opportunities for convenience and cost-savings in the modern home.
The good, the bad and the unnecessary
Back to the question of necessity. Does your investment property really need smart tech upgrades? That depends on what piques your interest and how you intend to use it. Here are a few of the more viable upgrades you might consider, as well as a few to avoid:
· Learning thermostats: High utility costs can eat into your margins if your tenants aren’t paying for them. Learning thermostats have been proven to decrease monthly utility bills and can be programmed by you or your tenant for maximum efficiency. The technology of learning thermostats today has pushed them from a flashy commodity to a must-have upgrade in rental units.
· Smart door locks: Gone are the days of issuing tangible keys to your renters! Simply provide them with a smart code for their locks and they’ll never lose or copy a key again. Best of all, codes can be issued temporarily for guests and visitors, meaning you never need to worry about changing locks if someone moves out. Smart locks give you total control over who has access to your rental property outside of tenants.
· Smart cameras: No tenant wants to feel like they’re being watched from on high by a landlord. Putting security cams inside a rental property is actually illegal under Canada’s Freedom of Information and Protection of Privacy Act (FIPPA) and there are heavy restrictions to how outdoor cameras can be installed and what they’re allowed to capture. The safe, smart bet is to avoid them altogether, unless a situation such as crime or vandalism threatens the property itself.
· Voice assistants: If you have home automation components, it may be tempting to tie them together with a voice assistant. For the sake of your rental property, avoid this. Often, voice assistant devices are tied to personal accounts, which means giving tenants access to a product you’re ultimately responsible for. Similarly, tenants may feel uncomfortable using a voice assistant they didn’t specifically purchase and set up themselves.
· Smart lighting: Unlike a learning thermostat that’ll save you money, smart lighting won’t. The cost of retrofitting and installing LED lighting won’t come close to the money you save by simply using CFL lightbulbs instead of incandescents. Moreover, smart lighting is really only useful with a voice assistant to activate and control it, which isn’t viable in a rental property.
· Visual doorbells: Visual doorbells are great if you live at the property, but they’re almost useless for rentals. For tenants to make the most of a visual doorbell, they’d have to set up an account with their own device. The only real upside to visual doorbells is video cloud storage, which could be useful in the event of a crime, like package theft or burglary. Otherwise, it’s safe to say visual doorbells aren’t ready for the rental market.
Most other home automation products not mentioned here aren’t quite applicable to rental properties. Motion sensors, smart outlet plugs, wireless remotes, smart appliances and more just don’t have any real potential for cost-savings or return on investment (ROI) at the investment property level.
Weighing the benefits of an upgrade
Bringing smart home upgrades into your rental property is really a question that begets another question: “How will this investment come back to you?” The answer can come in three distinct ways.
First, cost savings is a chief consideration. How much money will you save each month or annually by investing in a learning thermostat or motion-controlled lighting? Is it enough to offset the cost of the upgrades and generate more cash flow after the initial investment is recouped? If the math adds up, upgrading is a no-brainer.
Next, consider the appeal of your upgrades to prospective renters. Is someone willing to pay more in rent to have modern conveniences like smart door locks or intelligent outlets? If so, how much more? Being able to tout home automation features and justifiably tack on $X to the total cost of rent is invaluable. You’ll generate more income right away and over time, depending on the cost-saving nature of your technologies.
Finally, look ahead towards resale value. If you’re planning to sell your investment in the next few years, consider home automation upgrades an investment in its future selling price. Combined with other general upgrades to a home, prospective buyers will see a property that’s modern and move-in ready. Spending a few hundred dollars now could lead to a few thousand more when the time comes to sell.
Be cognizant of wary tenants
One final consideration in whether or not to install smart home tech in your rental property is tenant opinion. Some tenants embrace smart tech; others are extremely wary of it. If you have existing, long-term tenants, be sure to ask their opinion. You don’t want to drive out good tenants with unnecessary upgrades. However, you may find the idea of home automation is welcomed and encouraged.
If you’re between tenants or prepping a property for the market, ask yourself what kind of tenant you’re trying to attract. Will someone misuse or abuse these amenities? Will they scare off flighty renters? Consider a risk vs. reward scenario to see if smart home tech is worth it.
The future is smarter
Eventually, smart home tech and home automation devices will be staples in most modern homes. But we’re not there yet. Deciding on whether to press the envelope or wait for the market to smooth out is up to you.
Take stock in the technologies available, the benefits and drawbacks of installing them, and the impact this will have on tenants. Then, think about if and how these modern conveniences will put money in your pocket.