Multifamily housing is a competitive market, whether you manage new Class A's or performing Class B's and C's. This is as true now as it has ever been, especially when it comes to multifamily rental properties. Consider where market conditions are today — high demand, limited supply, relatively low interest rates, and a strong job market — along with how quickly new technologies are presenting different amenities and solutions to problems. And the biggest dilemma facing anyone who owns or manages multifamily properties is how to properly invest today in order to stay ahead of the competition now and into the future. Unless you have a crystal ball, this is no easy task.

One of my favorite professors once told me that understanding value is simple, as value is simply a function of the utility provided by a product or service divided by its cost. In recent years, market conditions have allowed market forces to drive up the price part of this equation. However, the strong economics that have been a tailwind to rate increases have also spurred new supply investments — both traditional and new asset classes like professionally managed single-family rentals — that are coming online over the next couple of years. Whether you serve rent-by-choice or rent-by-necessity residents, the right amenities are the tools that can differentiate an asset and attract and retain tenants, regardless of the economic cycle.

Most of the amenities that drove differentiation in the past cycle are now considered table stakes. While some newer amenities like pet-friendly facilities and short-term rental compatibility have emerged, they tend to be building-, resident-, and regulation-sensitive. Technology has permeated our lives (heck, 77 percent of us now have smartphones, which we check every 15 minutes) and has the potential to provide amenities to a variety of resident demographics. So what tech amenities help?

According to a recent survey by Entrata, 57 percent of current renters would be willing to accept a rental price increase in order to have smart-home technology, high-speed internet, and online rent payments as amenities. In fact, surveys by NMHC and Wakefield found that home automation amenities such as smart locks, connected thermostats, and digital assistants — such as the Amazon Echo and Google Home — are among the most desired amenities.

At least one connected device is found in one-third of U.S. households — and this is for an industry that is only about five years old. While there have been challenges for renters adopting home automation systems in the past, I would argue that this overall demand by households, combined with the operational benefits that an enterprise property automation system brings to property managers and owners, will quickly make home automation systems standard in rental housing units.

When done as part of an enterprise property automation system, home automation has the unique ability to allow property managers and asset managers to add value to their specific properties by offering residents monthly savings, increased convenience, and higher safety to tech-loving Millennials, downsizing Baby Boomers, and every type of renter in between.

Property improvements can be expensive, but there are ways to make them pay for themselves — and then some. These three tips should get you started:

1. Know your market and your renters. 

Not everyone who lives in multifamily housing wants the same thing. According to data collected by Apartment List, renters like some amenities are not offered nearly enough. For example, 53 percent of renters say they want in-unit laundry, but only 13 percent of properties offer that amenity.

What your renters want will differ depending on your location, the climate, and a whole slew of other variables, so it’s important to know your specific market. If your property is a Class A in a downtown location, a fuller suite of home automation tech, including light switches, thermostats, voice assistants, and video cameras, might be exactly what your residents value. If your property is workforce housing, smart-home technology can save money on utility bills while also turning on the lights to give the impression that someone is home — which can be a major selling point for your property.

2. Work with partners to identify the right option for you.

Across property improvement categories, the sheer number of options can be daunting. Finding partners who understand your market and have experience to offer you in this process can help you avoid overbuilding and maximize tenant retention.

These partners might also help you think of approaches you wouldn't have considered otherwise. For instance, you might not have realized that many top renovations in the past few years are projects designed to bring people together in common spaces. Outdoor kitchens, clubhouses, and playgrounds can be affordable ways to increase your property's appeal.

3. Don't overlook amenities that also drive operational benefits.

Improvements that make your life easier are always a plus. For example, smart thermostats save residents money on their heating bill, but they can also inform you immediately when maintenance issues arise. Water monitors are another example. Sensors that will notify you of leaks or automatically shut off the main valve in case of a problem can save you big money on water damage (the average claim for water damage is nearly $7,000).

Other appealing amenities that are useful for everyone include keyless access systems (which are more secure), LED lighting (which improves ambiance and saves electricity), and online rent payments (which can save you time when taking rent payment).

Where Should You Start?

Choose your projects with intention. The number of projects you take on will depend on what you need to accomplish, your desired net operating income, and what the value of the amenities you're considering might be. Projects that have a payback of three years or less (which amounts to an ROI of 33 percent or more) are usually safe, as they will pay off within the current owner's holding period.

Also, never start a project before you get feedback from residents. Use a general survey first, and then consider following up with a focus group or making changes to a demo unit that they can see. Tech upgrades definitely make multifamily properties stand out, but don't assume that only Millennials will want properties with "smart" technology. While 86 percent of Millennials say they would pay more for a "connected" home, so do 65 percent of Baby Boomers. So don't make assumptions; ask your renters what they want, and listen to them.