5 Ways PropTech Helps Increase Asset Value
- 4 minute read
We all want to make more money.
For asset managers and property investors, doing so through the addition of property technology, or “proptech”, has become an increasingly attractive option. Aesthetic changes such as renovating the lobby have long been the traditional means of increasing a property’s value, but these investments are costly, intrusive, and have long payback periods.
For some, the inclusion of proptech may have been seen as a prohibitive expense, but innovation in the space has made it simple and cost-effective to transform even retrofit projects into connected, smart communities. With amenities becoming such a big selling feature in today’s market, being able to offer your residents a lifestyle that is connected to their busy lives not only makes your building more attractive, but it is also just good business.
Here are 5 ways that proptech can help increase your building’s overall asset value.
Reducing your operating expenses (OPEX) is one of the best ways to help increase the overall asset value of your property. Capitalization rate, the most popular measure through which real estate investments are assessed, is calculated by dividing your property’s net operating income (NOI) by the current market value. This assesses your investment for its profitability and potential return.
NOI is the result of subtracting your operating expenses from the annual income generated by the property, so lowering your OPEX will increase your NOI, and positively impact your cap rate.
To that, there are a number of ways that proptech can help reduce your OPEX.
First, it can help you streamline your common property management tasks and processes. Property management platforms like 1VALET’s remote management portal can save you time and money by combining all your management systems together into one web-based dashboard. These platforms are intuitively designed to streamline your typical managerial duties, save time during the day, and reduce required staffing. The ability to remotely access these management tools from anywhere also helps reduce travel time and costs by eliminating the need to be on-site.
1VALET’s Smart Building Operating System (OS) also includes a Virtual Concierge feature, which allows you to redirect concierge calls from the entry system to one centralized location. Concierge costs are one of the largest costs incurred by property owners and asset managers every year, and so the ability to simply eliminate even just an overnight concierge shift can save you hundreds of thousands of dollars a year.
The inclusion of proptech in your property will not only save you money, it will also help you make money.
Other than reducing OPEX, the other way to increase NOI and positively impact your cap rate is to increase the monthly and annual revenue generated by your property. The best way to achieve this – charge more for rent.
While laws and regulations limit annual increases in rent, the inclusion of smart building technology and the prospect of a new and innovative resident experience will allow you to charge significantly more from tenants for rent on a monthly basis. This luxurious lifestyle full of convenient and smart amenities provides a new standard of living and makes your building more desirable. This lets you charge more on a monthly basis, and leaves you with more money in your pocket.
Provides Competitive Advantage
Another benefit of including smart building technology is that it provides a competitive advantage in an industry that hasn’t experienced much in the way of technological innovation.
The real estate industry in particular has yet to experience the degree of innovation that many other industries have over the past few years. It’s been slow in its adoption of these technologies, and as a result many developers and asset managers still offer the same mundane living experience. The inclusion of proptech not only helps lower costs, it also gives you a leg up on the competition, makes your property stand out, and helps make your building more attractive to prospective tenants.
Residents want the newest and most innovative living experience possible, and giving them that is just good business.
Provides Sustainability & Energy Savings
Investments in sustainability and energy savings are some of the most important and impactful investments you can make in your building. Not only will they help prolong the life of your building, but they will also save you money while positively impacting your carbon footprint.
One of the best and easiest ways of doing this is through the addition of smart thermostats. Most smart building platforms today include integrations with smart thermostats, providing you with a number of cost-control and cost-saving benefits as a result.
Devices like ecobee’s smart thermostat, which gives residents control of their temperature settings from anywhere using their phone, saves 26% on energy costs annually. These software-driven devices use innovative machine-learning to continuously learn and adapt to how your home heats and cools, optimizing the schedule for energy-efficiency and cost consumption. As the software behind these thermostats evolves over time, so will the cost-saving benefits.
Integrations with your smart building platform will also give you remote control of the thermostat, allowing you to put it into a cost-saving mode during tenant turnover.
Future-Proof Your Building
While some smart building platforms offer a level of technological sophistication that is impressive for today, there are others that are designed to grow and evolve over time. This means that even while your building ages, the technology running it will only continue to improve. This helps make your building future-proof.
The key is to look for platforms that are software-based, rather than hardware-based. Platforms that tie you into a certain hardware family don’t age well, and the technology can become obsolete quickly. When it comes time to finally upgrade, these infrastructural improvements can become prohibitively expensive, and leaves you between a rock and a hard place.
Software-based platforms on the other hand, like 1VALET’s Smart Building OS, are designed to grow and evolve over time. They are designed to be hardware agnostic, meaning they integrate with a number of hardware brands and manufacturers, allowing you to pick and choose the one that works best for you and your residents. Improvements to the platform come in the form of free software updates as well, so you’re getting a platform that grows with your community and ultimately adds value to your property.
1VALET is a smart building operating system that integrates IoT technologies to better connect residents to their community, and easily convert multi-family buildings into connected smart communities. By centralizing building systems into one web-based dashboard and empowering tenants with a leading Resident App, 1VALET can enhance resident engagement, increase NOI, and create safer, smarter communities.