The internet of things (IoT) has the potential to completely revolutionize how we interact with the world. But, is it at the point yet where it can help enough to justify the cost of smart building upgrades? As a multifamily investor, you have a lot of choices in what to do with your units, especially if you’re looking to value-add.
BENEFITS OF SMART BUILDING UPGRADES IN MULTIFAMILY
Because of the wide variety of smart systems out there, you can get many different types of benefits. Here are a few of the main benefits from common types of smart building systems:
- Remote Monitoring & Control
- Limiting Access
- Health Benefits
- Usage Measurement
BREAKING DOWN THE COSTS
The benefits might be obvious for you, but the costs to get those benefits are substantial. Smart systems aren’t an impulse purchase you can just tack onto any multifamily purchase. There are a few significant costs involved in making smart upgrades.
RETROFITTING VS. NEW BUILDS
If you’re doing a ground-up build, it’s easier plan for smart systems from the start. Retrofitting smart systems into existing buildings is much more difficult and usually more expensive.
These costs are all upfront. If the benefits are substantial enough, it may still be worth considering a high upfront installation cost. Do the math for your multifamily to see where the breakeven point is.
DEVICES & INSTALLATION
Systems can range from simple utility monitoring devices to full security systems with cameras, smart locks, and alarm systems. The best way to know the cost of the devices is to research the type of system you are interested in and find industry averages. As long as the devices you get are compatible with each other (both hardware and software), you can look for devices that fit your budget better.
SECURITY AUDIT
Before you can start using a new smart system, you need to do a security audit. This helps to protect your building and tenants from outside interference. IoT devices connect to the internet, so they are at some risk of being hacked. However, you can minimize this risk with the right security measures to make it almost obsolete.
MAINTENANCE
Smart devices are not a one-and-done affair. But then, what part of multifamily is? You will need to budget for regular maintenance to keep the devices performing as they should. The budget for this will be based on the number and type of devices connected to your system.
COST-BENEFIT ANALYSIS
DO YOUR TENANTS WANT IT?
DOES IT MAKE SENSE FOR YOUR ASSET TYPE?
CAN YOU RECOUP THE COSTS?
FINAL THOUGHTS
Depending on who your target market is, where your property is located, and which asset class you’re operating in, smart devices can be a useful addition to your property.