Smart home technology is evolving to solve the core challenges of maximizing property income and reducing maintenance workload. With increased technology adoption, it's crucial for owners and operators to measure the return on investment (ROI) to make informed decisions and ensure these solutions are effective.
Beyond the initial expenses, smart home tech delivers lasting value through reduced energy usage, more efficient operations and better resident retention. But how can multifamily owners and operators calculate the financial impact of their technology investments?
By tracking key financial and operational metrics, you can clearly show the benefits of smart home adoption across your portfolios.
Understanding ROI in smart home tech
Return on investment essentially shows you how much you're getting back for what you put in. With smart home technology, ROI isn't just about making more money. It's also about saving money, operating more effectively and enhancing the resident experience, ultimately making your properties worth more.
Here are key ways smart home tech drives ROI:
Reduced operating expenses – Automated systems like smart thermostats and lighting reduce energy consumption, leading to lower utility costs. Leak detection sensors prevent costly water damage, which reduces maintenance and repair expenses.
Increased revenue potential – Smart home features can justify higher income potential, increase occupancy rates and improve resident retention—ultimately leading to greater revenue.
Property value appreciation – Upgrading units with modern technology makes properties more attractive to investors and buyers, driving higher asset valuations.
Operational gains – Automating maintenance, access control and communication simplifies property management, which reduces staff workload and improves response times.
Resident demand drives smart home tech
According to the Grace Hill 2024 Renter Preferences Survey, a growing number of residents expect smart home features as part of their living experience. The report highlights:
Residents want smart amenities – Many residents are willing to pay more for rental homes with smart thermostats, keyless entry and integrated security systems.
Smart tech increases satisfaction and retention – Communities with smart home technology report stronger lease renewal rates, as residents value the added convenience and reduced worry about property safety.
Offer smart tech for a competitive edge – Offering smart home features differentiates a community from competitors, making it easier to attract high-quality residents.
These insights reinforce the financial case for smart home tech—not just as an operational upgrade but as a revenue-driving strategy.
Key metrics to track for smart home tech ROI
To measure the true impact of smart home technology, multifamily owners and operators should track a combination of financial and operational metrics.
Financial metrics:
Measure energy cost savings – Monitor reductions in utility expenses due to automated climate control and energy-efficient smart lighting.
Track maintenance cost reductions – Track declines in emergency repairs and maintenance requests as IoT-enabled monitoring detects issues early.
Compare income potential and occupancy rates – Compare income potential and vacancy periods for smart-enabled units versus traditional units.
Assess property valuation increases – Assess how smart technology investments contribute to higher appraisal values and investor interest.
Operational metrics:
Measure efficiency improvements – Measure time saved on maintenance workflows, access control and resident communications.
Gauge resident satisfaction – Use survey data and online reviews to gauge how smart tech influences resident experience.
Mitigate security risk – Track reductions in security incidents, unauthorized access and damage claims due to proactive monitoring.
Build a framework to measure ROI
Successfully tracking smart home tech ROI requires a structured approach. Here’s how multifamily operators can implement an effective measurement framework:
Set clear objectives – Define the specific outcomes the property wants to achieve, whether it’s lowering operating costs, increasing income potential or reducing turnover.
Establish baseline data – Before rolling out new technology, document current energy expenses, maintenance costs, occupancy rates and resident satisfaction levels to serve as a comparison point.
Leverage property management software – Use integrated PropTech platforms to collect and analyze data in real time, making it easier to track performance metrics.
Evaluate performance regularly – Conduct quarterly or annual reviews to assess whether the technology is delivering expected results, and adjust strategies accordingly.
Refine and scale successful implementations – Use pilot data to expand smart home tech investments across the portfolio, ensuring long-term benefits and consistent ROI.
Invest smartly for a smarter future
For multifamily owners and operators, the financial benefits of smart home technology are clear—but only when measured correctly. By tracking the right ROI metrics, leveraging real-world resident demand insights and implementing a structured evaluation process, operators can confidently invest in smart technology to increase property value and resident satisfaction.
Ready to start measuring the ROI of smart home tech in your properties? Let’s talk.