If you’re upgrading your property with proptech (property technology), there are a few things you’ll need to consider first. Proptech has many applications depending on its users’ requirements. When investing in proptech, choose products or services that address the needs of residents, property staff, or both. But proptech selection doesn’t have to complicate your life. Read this post to learn how to select the right proptech for your building.
Select the right proptech for your building with these three steps:
Step 1: Know your market
It’s true of every business in every industry — the first step to take when making a significant investment is to collect as much information as you can. As a multifamily operator, here are some important things to take into consideration.
To select the right proptech investment, you must first understand:
- Your market
- The demographic you’re addressing
- Your residents’ needs
- The type of living experience your residents expect
Your proptech needs will shift depending on which demographic you’re catering to.
Millennials, baby boomers, and proptech
Approximately 75 million millennials now live in America, more than any other age demographic. They will be the largest group of renters for years to come. However, baby boomers remain the wealthiest generation. Plus, as they continue to retire and move to big cities where more services are available to them, they still represent the fastest-growing group of renters.
The primary proptech needs of millennials and baby boomers overlap, but there are a few key differences:
- Millennials want to ensure product and service delivery to their doorsteps, even when they aren’t home to provide building access.
- Boomers want the assurance that their living spaces are accessible to those who matter and protected from those who don’t.
Some proptech features appeal to both generations. Millennials and baby boomers both share a desire for convenience and security. They’re also both comfortable with having the doorman experience of providing secure and convenient access to the building without necessarily having doormen themselves. The National Apartment Association and National Multifamily Housing Council have both reported that security-related proptech ranks at the top of the list for all residents, and Wealth Management Real Estate notes that the majority of residents want convenience-based technology most of all.
Step 2: Get internal buy-in
Make sure everyone from upper management to property staff understands the use cases for proptech. Ensure the “why” is clear: You aren’t selecting proptech just because it’s trendy, a hot topic, or the reigning buzzword of the day.
Make sure to demonstrate or explain the value of proptech in terms of:
- Operating efficiency
- High resident satisfaction and retention
- Lower turnover
- Positive impact on the building’s NOI
Further, trained and knowledgeable staff are essential to your project’s success. There is no substitute for technology preparedness. The National Apartment Association urges property managers are urged to provide upfront and ongoing training and make sure all staff understands why proptech is essential.
One good practice is to cross-train your staff so that each individual knows explicitly what everybody else’s duties and responsibilities are. That way, they can help manage breakdowns and other issues should anything unexpected happen. And always emphasize that what helps your residents can also benefit your staff.
Step 3: Develop your budget
When you’ve decided on your target market, then it’s time to get cost estimates and a detailed breakdown of your hardware, installation, and ongoing maintenance costs so you can nail down your budget.
Some costs may include:
- Hardware costs for keyless locks. Keyless locks start at $100 and go up to $300 per lock. For a 100-unit building, this can cost between $10,000 and $30,000.
- Installation costs for keyless locks. These costs can be tricky to calculate because there are many factors to consider, such as whether the locks are battery-powered or wired. If they are battery powered, then installation will be straightforward and you can budget anywhere between $75 and $150 per unit to install each lock. Should you be wiring a new development, you can expect the material and labor costs to be three to five times the hardware costs. If you need to run wire in an existing building, you will need to get a few quotes because installation costs depend heavily on the existing infrastructure and whether the installer can use it or has to start from scratch.
- Ongoing maintenance costs for keyless locks have two components: hardware and software. The ongoing hardware costs are straightforward. Typically, you can expect 5% of the locks to fail every year. If you like, you can also calculate the electricity usage/batteries required, though this cost is usually insignificant. What can be expensive, however, is having someone come out to change the batteries or replace the locks when they fail. Ongoing software costs are set by the provider and are easily determined. The only real concern is choosing a provider that delivers those updates remotely or on-premises. On-premises updates can significantly add to ongoing maintenance costs.
Dive deeper into learning how to select proptech that works for you by reading our free guide below!