How much rent premium are smart home features worth?

13 Replies

I am noticing that smart home amenities for new construction apartments and homes are becoming common. For those of us who own older non-smart properties, I want to analyze cost benefit of retrofitting. It is possible to retrofit an apartment with a smart lock, video doorbell, smart thermostat, voice and app controlled lights, smart interconnected smoke alarms etc.,  How much rent premium will your tenants pay? Please pick closest number among these 3 options.

1) 0

2) 25

3) 50 or more

Any other ideas to increase rent with smart home features?

I don’t know but once we replaced a programmable thermostat with a rotary one because a tenant couldn’t use the programable one...even already programmed and with a short “lesson.” You may want to wait until it is mainstream, a lot of people want “no think” easy. A Nest might lower wear and tear on an ac unit if your tenants leave it running all the time...they do that and wonder why the bills are so high. A door area camera might be nice in a sketchy area, but Texas requires door viewers which work well with dusk to dawn led lamps...and a decorative metal security screen type door is probably better security than a camera. Just imo.

Market specific.

The most likely answer is zero dollars. It only matters when the rest of your competition is doing it and you aren’t.

For rent, I would say it isn't likely to make much of a difference if any at all. It's a nice feature to have, but as a renter, that is of lesser concern than the price of rent in relation to the competition. The renter's thought process being: "I can manually change the thermostat if it costs me $50 less each month" is something I would take into account before implementing smart hardware into a rental property. Focus on the aesthetic of the property before adding bells and whistles.

Always keep it simple, I have found out the more that can go wrong the more likely it will go wrong. Unless the property is a top end then I would not install more gizmos.

I find this is true with appliances too the more electronics the more likely it will turn into a service call.

Easiest programmable thermostat is a $30 honeywell one that has a 5/2 schedule. I always leave the instruction booklet within the unit too.

I always interconnect smoke alarms, the wireless ones couldn’t be simpler, spend the extra $50 x3 and use them.

As for smart thermostats... I’ve got a nest2 at my place. New app update last month isn’t as user friendly I find but man are they good looking and actually do save some cashish (long term). I stick with the programmable 5-2 for rentals so far.

Just use LED lights... they can be as stupid with them as they like and it’ll only cost $4/ year.

Other than that, most oddly pleasing to 20 somethings feature I always make sure to point out are the USB / 110v receptacles I use. 1 per bedroom wherever the night stand would go, one in living room, one on kitchen counter as long as it’s far enough away from the sink to not need a gfci. Be amazed at how many 24 year old females think that those $20 receptacles combined with the $150 chrome coil pull down kitchen faucet mean they MUST have this specific place..

Zero, is the answer most of the time, the most important things are location, size, and condition.  Any "extras" add little to no value and the value is hard to quantify in a dollar number.

Thanks everyone foe the reply. I started the poll after I have seen many of my tenants replace their thermostat with nest. I have installed security cameras on some units and those were easier to rent and I still get questions about when I would install security cameras for other tenants. 

It is evident to me these features are worth something. Otherwise it wouldn't be a trend in multifamily to install them. We typically charge $40 extra for installing a Fridge and $50 for washer/dryer. Obviously, tenant can buy these and not pay us, but they never do. 

My vote is for $25 a month.

@Billy Smith Agree with you, more gizmos and more things go wrong. That would be my biggest deterrent as well.

@Marian Smith what is the texas doorbell requirement you are talking about?

one of my buddies on high end rental units put I pod docks in now this was 10 years ago I dont even know what those really are I suspect maybe you put your phone in there or something then it plays music..

I can see combo locks could be good for PM's so they are not running around with 7,000 keys.

I put that on my Vegas place and i like that.

with the new construction we build we dont do any smart things.. and these are middle range to upper range unless we get a pre sale and the client wants to do it..  there just is no return on that for us.. 

just have cable in every room so they can hook a computer or TV.. thats really what they want..

@Krishna Chava . Peephole Door Viewers are required by Texas Rental Code on all Exterior Doors and Door from interior of house to garage, unless there is sidelight or window in the door. Required on all Rental Properties. Occupant must be able to see who is on other side of the door.    

For everyone talking down on Smart Home amenities, Schlage did a national survey of renters and found millennial renters, who make up more than half of the renting population, are willing to pay up to 20% more for smart home amenities. Those numbers will vary by the extent that your units are retrofitted with these technologies, but the smart lock is the highest in the list of most desirable tech. I couldn't find the exact study, but found a PRNewswire article on it. Posted below: You can also update your property management platform with one that integrates with these devices, which gives your residents an app to control all the devices, pay rent, request maintenance, etc. I know I'd pay at least 50 more for something like that.

https://www.prnewswire.com/news-releases/results-of-schlages-industry-insight-survey-reveals-what-millennial-renters-want-in-2017-300369197.html

If you are in a high tech community like Mtn View, CA the tenants do not mind Cat-6, wanting electric car chargers and will pay a premium. Ring is fine. They are also opt to pay for it. 

However, a landlord in Silicon Valley complained about the maintenance issues. A Nest warning alert in the winter costed the landlord $125 to trouble shoot finding out the battery was low.   Tenants expect the landlord to pay for motion detection, fire alarm service.