Smart home technology has become a sought-after amenity among renters for the convenience, security, and cost savings it provides. Smart thermostats are at the top of the list when it comes to home automation technology. As a property manager or landlord, how can you know if adding smart thermostats in your rental units will benefit your property’s competitive edge?
Smart thermostats allow tenants to precisely control the temperature of the rental based on time of day, usage, and weather patterns to help save energy and lowering heating and AC costs. Smart thermostats are devised to automatically adjust temperatures based on the residents’ behavioral preferences and patterns. Smart thermostats can also be manually adjusted, allowing tenants to adjust and monitor the temperature of a unit remotely. They also provide property managers and landlords with more control over the energy outputs of the units.
Smart thermostats are relatively straightforward to install and compatible with most existing heating and cooling systems, making them a welcome upgrade that’s easy to integrate into rental units.
Attracting and retaining tenants
Especially in competitive housing markets with many options for renters to consider, attracting and retaining quality renters can be challenging. However, rental properties offering smart technology is proving attractive to more renters of all ages. According to Buildium’s Annual Renters’ Report, 71 percent of millennial renters are more interested in units with smart home technology-enabled units. Fifty-five percent of baby boomer renters favor rentals with smart home technology, but only if it’s intuitive to use.
The data on smart thermostats shows that, on average, 32 percent of renters surveyed say that they would be more interested in renting a unit with a smart thermostat installed. The added bonus is the eco-friendly benefits that smart provide, a feature that appeals to more residents who are conscientious about living a sustainable and energy-conscious lifestyle.
Property managers hoping to encourage current tenants to renew their lease may be able to convince them to stay by offering to install a smart thermostat. The same Buildium report finds that 12 percent of survey respondents say they would be more likely to renew their lease if smart home technology was to be installed.
Raise the Rent
Additional data from the survey reveals that 23 percent of renters would be willing to pay higher rent for a unit with smart home technology installed. When you compare a smart thermostat to the top three unit amenities for which renters say they’d be willing to pay a premium (including in-unit washer/dryer, central air conditioning, and a balcony or private patio), a smart thermostat is much less expensive and easier to install. When considering upgrades to improve the value of a unit, we recommend that property managers first perform some market research to understand the potential a particular upgrade can justify a higher rent price based on how much people would be willing to pay for the added feature.
If you have existing tenants who are considering renewing their lease, you can add the addition of a smart thermostat to explain the upcharge in rent in your rent increase letter, and further explain how a smart thermostat can lower their utility bills and compare what they’d save in energy costs to what they’d spend in rent to emphasize your case. Utility companies will often do the analysis for you.
Lower costs for property owners who pay the utilities
Property owners with multi-family residences who have no way to divide the utility bill among tenants, installing smart thermostats is an easy and affordable way to save some money. Smart thermostats can help make your units as energy efficient as possible and enable you to control the heating and AC remotely. Tenants who don’t pay their own utilities are less likely to be attentive when setting the heat or cooling temperature in their units. A smart thermostat puts you in control when it comes to monitoring temperatures and minimizing energy costs.
Additionally, energy isn’t wasted in vacant units since smart thermostats automatically expend less energy in unoccupied spaces. They can also provide you with an idea of total usage across your properties if you own more than one.
The most popular smart thermostats, such as Ecobee4, Emerson Sensi Touch, and Google Nest Learning Thermostat range in costs, generally between $130 and $249. Depending on the number of units to which you plan to add smart thermostats, the cost can add up. However, there are some great local and state energy efficiency incentive and rebate programs available to property owners for energy-saving devices. Before you make an energy-efficient purchase, visit the Department of Energy (DOE) website to search their database of energy efficiency tax credits, rebates, and savings available at the local and state levels.
While providing smart thermostats offers your renters the opportunity to save money on their utility bills, as a property owner you’re not saving any money. However, you can raise the rent on your units to defray the initial cost of your investment and at the same time, give prospective tenants an incentive to choose your property over your competitors and encourage current tenants to renew their leases.
If you’re considering replacing any major appliances or preparing to start significant renovation work, if investing in smart thermostats threatens to bust your budget, now may not be the time to install them. Go with those upgrades that your market tells you are most attractive to the highest percentage of renters.
Other smart home options to consider include smart locks or a smart security camera system, which renters also rank high on their list of preferred amenities. However, keep in mind that, not only do those options cost more to purchase and install, for security cameras you’ll want to make sure to consult with neighbors and familiarize yourself with local and state laws regarding security systems as these devices could impact issues of privacy.
When it comes to deciding whether to install smart thermostats in your rental units, you know your budget and rental market best. If you don’t, we highly recommend working with a property manager who is qualified, understands your market’s demands, and is experienced in helping property owners make smart home upgrade decisions The right property management team can help you determine whether installing smart thermostats will boost your rental property’s appeal to renters and help boost its competitive clout among other rentals in the area. They can also help set fair market rent pricing, and assist with renovations.