Close your eyes and imagine yourself back in time –
It’s the early 2000s. You boot up your desktop computer, you click on Internet Explorer, and from beyond space and time, you hear an old familiar sound that you haven’t heard in ages…the wah-wah beeps and clicks of your dial-up Internet making its connection.
It. Takes. Forever.
Now, snap back to the present and thank your lucky stars that dial-up days are long gone.
We asked you to dip your toes back in time to demonstrate just how much things have changed – and are still changing – since the early days of Internet connectivity. And we don’t just mean in terms of the actual connection, although there have been such significant leaps and bounds that research shows even a 3-second delay in connectivity is too much for many of us. Some of the most significant changes are in the ways that people and businesses source their Internet.
The Paradigm Shift
Five to 10 years ago, properties would sign a contract with a traditional cable provider to offer Internet to residents. Each unit had its own account and connectivity was limited to the individual apartments or units – not property-wide. But just as we advanced past the days of dial-up, the industry has also shifted beyond this antiquated type of WiFi partnership. Today, more and more brownfield and new apartments are investing in managed WiFi rather than traditional cable-based Internet
What is Managed WiFi
Managed WiFi is a solution that:
- Allows properties to outsource the tasks involved in designing, procuring, installing, maintaining, monitoring, and/or upgrading a WiFi network to a third-party vendor
- Enables residents and/or guests to connect to the Internet via multiple access points throughout the property for ubiquitous connectivity
What are the Benefits of Managed WiFi?
Managed WiFi can increase a property’s Net Operating Income, or NOI, by providing a highly sought-after operational improvement that allows properties to charge more (aka: collect greater revenue). A 2021 survey by Parks Associates found that 40% of U.S residents who live in multi-dwelling apartments (MDU) were open to bundling internet services with their monthly rent. And 77% of those were willing to pay higher rent for the included service. By offering Internet to residents through a Managed WiFi solution, rather than simply allowing them to work directly with the cable provider, properties can capitalize on this revenue and increase the value of their property in the eyes of real estate investors.
Increased Property Valuation
Similarly, Managed WiFi can help properties increase their valuation based on cap rates so they’re more attractive to potential investors. By implementing Managed WiFi, properties can charge more per unit, thus increasing their return on capital as the property will produce a higher yield from cash flow post upgrade.
For example, a property with 305 units charging $99/unit for Managed WiFi will generate $326,106 in revenue per year, less operating expenses (roughly $50,000 in support and the cost of the backhaul). This will generate more than a $280,000 increase in the NOI of this property and a $7,005,150 increase to the building’s valuation at a 4% Cap Rate.
Scalability for a Better Renter Experience
As residents use more and more devices in their daily lives (the average device per person in the U.S. is currently around 9), properties need systems that can scale to meet the demands of residents. With traditional cable-managed WiFi, only a few devices can be connected at a time, but Managed WiFi can easily handle this level of dynamism through multiple access points that can individually handle hundreds of devices and smart home features per access point.
Managed WiFi and digital-ready homes can give properties a competitive advantage as they work to attract today’s largest groups of potential renters, Millennials and Gen Z. For example, according to the National Apartment Association’s survey of Gen Z renters, this group is looking for Wi-Fi-enabled communities and security access control features above all other amenities. In a separate survey, nearly 95% of Gen Z renters rated “internet speed inside the apartment” as an amenity that deeply influences their decision to sign a lease. Additionally, Millennials are willing to pay about 20% more and stay longer in buildings that offer modern amenities, like Managed WiFi. The value of upgrading a property to meet these needs and compete in a high-demand rental market cannot be overstated.
For properties that are looking to make the paradigm shift away from the traditional cable provider to a Managed WiFi solution, Cloud5 can help. Our Internet and entertainment solutions can help your property deliver always-on, hassle-free connectivity that drives value improves your competitiveness, and modernizes your offering…because retro is cool, but not when it comes to the Internet. Learn more here.