ADDING VALUE
SMART HOME TECHNOLOGY
BENEFITS AND RETURNS ON SMART HOME TECHNOLOGY MENTIONED IN THIS ARTICLE W hen you evaluate the returns on Smart Home technology, you must factor in several types of return: financial, quality-of-life (often referred to as “enjoyment” on the retail side), and savings. Based on these qualifiers, we assem- bled a summary of benefits and returns for the following:
IoT in their real estate deals, projects, and portfolios.
HOWMUCHTO LIMITHUMAN INTERACTION? One of the most commonly cited reasons a real estate investor installs smart technology in a rental property is to create easier access to the property for maintenance and monitoring issues. For example, many landlords find the idea of electronic locks, which can be keyed for one-time access to resolve a maintenance issue and do not have to be physically replaced, just reset, when a tenant leaves, extremely attractive. Furthermore, smart thermostats enable property managers to check in on everything from humidity in the home (to prevent potential mold situations), temperature (to determine how dire a maintenance issue truly is compared to others in the event of a weather-related climate control emergency), and simply functionality (to potentially identify the source of a “broken” HVAC system). Smart security, set to be viewable from the property manager’s phone or the tenant’s phone, can be a big attraction for tenants. Even better, it may enable you to charge higher rents than you might oth- erwise or reduce your property insurance rates in some instances. Smart smoke detectors, energy-management systems, air purifiers and other connected, envi- ronmental health devices, and media and lighting systems offer similar advantages,
Smart Appliances According to MultifamilyExecutive (MFE).com, next-gen smart appliances bring in 13.8 percent more rent in rental units, and 15.4 percent more value on the retail market. Smart Locks
Smart locks come in such a wide range of prices and options that it is difficult to estimate returns directly. However, nearly two-thirds of Gen Y (which includes “senior” Millennials and individuals born as early as 1980) and about 9 out of every 10 Millennial renters said they would pay more for “high-tech” door locks. Smart Thermostats makes them relatively inexpensive to install, since a $180 device could end up costing only about $40 after rebates and credits. In terms of money saved, the specific amount will depend largely on your practices or your tenants’ practices before you installed the device and how you use it. According to some estimates, this type of product can save you about a quarter of your energy bill each month. Smart Smoke Detectors Smart smoke detectors can decrease your insurance premiums by about five percent. They are also far less likely to cause an exasperated tenant to disable them, since they often distinguish between minor Because these devices help save energy, they often qualify a home- owner or investor who installs them for incentives, credits, and rebates from local utility providers and government entities. This Like smart thermostats, smart lighting systems often qualify for rebates and credits because they can help limit energy use. On a commercial level, intelligent lighting systems often yield returns within 18 months of installation, since lighting plays such a big role in customer traffic. Residential- ly, this feature does more to attract attention to your property over other, similar properties without it. Smart Sound Systems smoky events, like frying bacon, for example, and an actual fire. Smart Lighting
What the Internet of Things Means for Your Real Estate Returns BE SMART WHEN YOU INSTALL SMART FEATURES IN YOUR PROPERTIES.
by Carole VanSickle Ellis with expert insight from Tyler VanWinkle
O
computer to learn something and it does what you want,” will play a key role in “every successful big startup exit event in the next five years.” Schmidt’s meditations on IoT may come from a very high level, but real estate investors will benefit from a much more hands-on approach, literally. As the IoT grows and pervades our daily lives, the “smart” appliances, systems, and amenities you offer your buyers and renters and that you utilize in your daily real estate business will directly affect your business growth and your bottom line. These practices extend far beyond simply automating some of your daily processes or using data to make good de- cisions, said Tyler VanWinkle, a partner at Kansas City-based Rivet and CMIO of Think Realty parent company Affini- ty Worldwide, founder of multiple tech
n January 25, 2015, Google then-chairman and former CEO
startups, and holder of multiple tech- and software-based patents. “In the real estate industry, a lot of com- panies have overcompensated and allowed tech to lead them too far,” VanWinkle explained. “That has killed the creative process. We become lax in the business process and lax in execution because we think tech will just drive everything.” He suggested combining the use of technology and data with a little bit of good, old-fash- ioned intuition. “A lot of companies make data-based decisions, but the ones that stand out mix some intuition in as well.” In the case of smart-home technol- ogy, where there is relatively little data available about traditional ROI on various types of installation available, that means that real estate investors will need to think a little bit outside the box when considering if and how to leverage
Eric Schmidt predicted that the internet would eventually disappear. He did not mean, however, that we would go back to the days before the “worldwide web” existed, but rather, “There will be so many devices, sensors, things that you are wear- ing, things that you are interacting with, that you won’t even sense it. It will be part of your presence all of the time.” Schmidt was referring to the Internet of Things (IoT), or the network of physical devices, vehicles, home appliances, and other items, such as smoke detectors and home security systems, when he made this statement. He followed this bold statement with a series of predictions over the course of 2016 indicating his belief that “machine learning,” where “instead of programming a computer, you teach a
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Tyler VanWinkle is the CMIO for Affinity Worldwide, and a partner of Rivet, a full-service technology and creative
As with smart lighting, smart sound systems do not yet have a long enough track record to establish ROI, but this type of system will likely attract relatively young, tech-savvy home buyers’ attention.
agency in Kansas City, MO. His extensive background in tech and innovation seated him as Technical Director at Barkley along with other roles in tech startups like Leap2 and Kozoru. His technology products have received funding from tech giants like Steve Case and Brad Feld. VanWinkle has won multiple Addy’s including Best in show, a Cannes Bronze Lion, and Cause Prizm Best in Show, and his products have been featured in publications like Wired.com, MIT tech review, Tech Crunch, and the front page of the New York Times, and is named on 5 active patents.
A Note on Internet Access/WiFi: Strong internet access can add three to five percent to the sales price or rental rate of a home. However, weak internet or a poor cellular signal can add many days to your time on market and force you to charge lower rental rates.
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