The ‘smart home’ technology trend finds new potential in SmartRent funding, according to an article by Reuters. This new wave of smart home software has increased owners abilities to interact with potential investors and buyers with ease.
SmartRent is a Scottsdale, Ariz. startup that allows owners to set up self-guided tours for prospective residents and give maintenance and others access to homes with a door lock code, reducing operating costs for landlords. Instead of shuttling keys to contractors, this kind of tech creates attractive ways to show properties to prospective tenants with a simple individualized code set up by the property owner or seller.
SmartRent has raised $32 million from Bain Capital Ventures and the owners of nearly 1 million apartments. $25 million was raised by a Series B fundraising round, increasing SmartRent’s market potential. The remainder of the funds came from RET ventures, a venture capital fund of 18 U.S. and Canadian property management, investment companies, and real estate investment trusts. Additional investments were made by apartment owners Essex Property Trust Inc, UDR Inc, and Starwood Capital (the investment arm of property mogul Barry Sternlicht).
Up against Latchable Inc and Google Nest for a foothold in the market, SmartRent helps property owners increase profit margins and generate revenue streams through add-on services for tenants.
Investors are betting on smart technology. Remote access to cooling and heating systems, water leak detection, and other valuable advanced technologies have increased the anticipation that these will be standard in apartments in the near future. Water damage alone can run near $10,000 per occurrence. With tech being able to warn owners before significant damage occurs, we could see a reduction in operating costs and insurance premiums.
UDR, a Denver-based tech company, has introduced tech that allows access to properties through mobile devices or a numerical lock. This keeps residents happy and reduces the hassle of losing or forgetting a key. Jerry Davis, president and chief operating officer of UDR, said, “we’ve experienced a reduction in lock-outs, so that increases resident satisfaction. It also means our guys aren’t getting called out in the middle of the night and being paid overtime”
At the recent REITweek conference, UDR said it generated a 25% to 30% return in a pilot program involving 13,300 or its 49,795 apartment units and expects to have SmartRent installed in 20,000 units by the end of summer
SmartRent’s costs for installing door locks, water sensors, and other hardware is between $900 and $1,000 a unit, according to Davis. Residents are expected to pay a fee of $20 to $25 a month, with the ability to pay off the program’s costs in three to four years with a unit’s life estimated at six to seven years.
There are almost two dozen connected home or remote-access providers in the market. Latchable, the maker of the latch digital lock system, raised $70, with the majority from real estate heavyweight Brookfield Asset Management Inc who valued Latchable’s lock system at $250 million.
With 23 million U.S. apartment units, there is significant potential for return on investment. If each unit delivers $1000 in revenue, the market could be worth $20 billion according to Matt Harris, a New-York based partner at Bain. Bain believes smart apartments will become ubiquitous as the technology is rolled out over the next five to ten years, though the ability to charge for service will eventually pass.
Finally, remote access is more and more essential as package and food deliveries increase and other service individuals or companies require access while residents are away. Yishai Lerner, co-chief executive of Jll Spark, the venture capital fund of Jones Lange LaSalle Inc., said, “the adoption curve has gotten from nice to have to must have,” reinforcing the fact that this type of tech will be the norm in households across the nation and the potential money-making opportunities for investors.