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Smart Home as a Service Might Speed Multifamily Tech Adoption

Deciding to invest in smart home hardware is an easy cost-benefit analysis for most homeowners. But things get a little more complicated when you have a renter living in an apartment building. If the renter wants to upgrade they usually have to get permission from the property manager, not to mention having to overcome the fact that they are spending money on someone else’s property. On the other side of the table, property owners and managers don’t want to risk an additional expense for a product that a renter might not use.

Despite 41% of homeowners owning a smart home device, there has been relatively slow(ish) adoption of smart home technology in multifamily buildings. A survey conducted in January found that renters put smart technology fairly high on their list of wants. The adoption blockage for smart apartments is largely coming from the property owners and managers.

It is easy to point fingers at the real estate industry and call them laggards and luddites but apartment operators have good reason to drag their feet. The technology is changing quickly and buying and installing devices can be a huge expense. The solution to this impasse might not be to wait until devices lower in price and every renter demands a smart home. Instead, the key to getting connected technology into apartments could be selling it as a service rather than a product.

One company that is doing exactly that is Zego. I talked to the founder, Adam Blake about why he thinks more of a service-based model is a great way to bring the technology to the apartment masses. “The biggest thing property managers care about with technology is keeping things simple, they want to make sure smart home equipment will require very little ongoing maintenance from them.”

To do that, his company offers a service of piecemeal technologies that can be deployed slowly. “The vast majority of apartment buildings are owned by single purpose entities that don’t have a huge cash reserve for unforeseen capital expenditure projects like smart home upgrades,” he said. “Plus, the owners often want to start small and ease in as they quantify resident demand for the product.”

As Adam and his team found out, there is a minimum requirement for “smartness” that apartments need to create value for the owner. “We learned early on that a lock, a thermostat, and a hub is the bare essential for a smart apartment. With that a manager can track who is coming and going, control their energy costs for vacant units, and showcase a nice technology amenity during prospect showings, giving them immediate benefits.”

Some of the apartment buildings that his company services actually give residents the option to upgrade to a “smart home package” (for $25-40 per month). They can choose to bring in the technology for an additional monthly fee and can upgrade at any time to include other devices like smart plugs, connected light bulbs, or a voice interface speaker like Amazon Alexa.

In order for the network to be useful for the managers and the residents, all of Zego’s hubs have a cellular connection so they can stay online when the residents move and take their internet service with them. When the residents are settled they are recommended to connect an Ethernet cable directly into the hubs for a faster connection. “We don’t touch the wifi,” Adam said, “connecting to those networks is typically a headache for everyone involved.”

One of the interesting takeaways from our conversation is that these kind of perks are not just for high-end rentals. “People assume these types of technology amenity services will only be popular for class A luxury buildings but in some ways we have seen the opposite,” Adam explained. “A lot of class B and C communities are more excited about this because it can be a true differentiator.”

The smart devices are only a portion of Zego’s services. They also provide an app that helps residents connect with management, maintenance, and each other. There is a marketplace on the app that includes discounts and the ability for residents to book various services such as apartment cleanings, pet sittings, and more,  which creates ancillary profit for property owners through a revenue split. One of Zego’s partnerships is with Rover, the nation’s largest pet sitting and walking network. Residents get access to exclusive discounts and units equipped with a smart lock can assign temporary access codes to Rover’s dog walkers. Zego also utilizes artificial intelligence technology to automate engagement with residents and to sell more services.

Slowly but surely, almost everything in our economy seems to be shifting towards a service model. Cable companies rent their routers so people don’t have to buy their own. Even bikes are becoming something that is rented rather than owned. So it makes sense that the upfront costs, setup and maintenance of a smart apartment would be outsourced to a service provider as well.

This shift might align the benefits of connected devices for the renter and the property owner enough to help smart home technology go from being mostly a homeowner benefit to something that renters can enjoy as well. All while creating a hassle-free way for property owners to increase revenue and diversify their property. Now that’s what I call a win-win.

Editor and Co-Founder
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