Solar panels can be a great way for property owners to save on electricity bills. But are solar panels right for single-family rental properties? Yes, utility costs are very important when considering installation, but they aren’t all that matters — there are other key details that you should look into prior to making a decision. While it is a significant factor, the initial cost is just one of many factors. Others include location and property values. Then, you will have to choose between a single rooftop or a community solar system. One more thing; do the math ahead of time. And lastly, a good thought to ponder on would be the amount of time it would take to get back the cost of your investment.
Cost of Solar
Truth be told, a solar system will most certainly cost you a lot of money. Great benefits wait for those who know how to wisely spend and structure their initial cost of installation. While solar panels and the other required components have gone down in price in recent years, installing an entirely new rooftop solar system will still run into the thousands.
Some solar companies offer financing or payment plans, allowing property owners to divide the cost of the installation over months or even years. Also, in some states, you can qualify for tax deductions that mitigate the cost of installation. Nonetheless, always factor the costs into your cash flows before committing.
Location
Ideally, solar panels need to be installed in strategic places for them to produce good and sufficient solar power. For example, sunny southern states will allow for greater efficiency and higher production rates for solar energy, while in areas with more cloudy days, that rate will likely be reduced. And, if your rental house is frequently shaded by trees, that will interfere in the solar system’s ability to generate high levels of electricity.
Effect on Property Values
The addition of solar panels to your rental property will most likely add to the value of the property. There are other factors that help determine the value of your property — one, for example, is the location. Solar panels are simply in higher demand in some places, in which case your property values – and your property’s appeal – may increase. But, higher property values may result in higher property taxes, so that’s something you have to think about before you make any decision.
Time to Recoup Costs
Typically, it takes a rooftop solar system about six to eight years to get back the cost of installation. This, of course, includes the savings on the electricity bill. And the number of years will be affected by other variables too, like your property’s location and how much sun your solar panels get every day. For homes in cloudy areas or with shaded roofs, ten years is a minimum before you can notice any measurable return on your investment.
Solar System Options
But, if what you’re looking for isn’t a rooftop solar system, you can always opt for other choices. In some places, property owners can decide to take part in a community solar program. Community solar offers rental property owners a chance to reduce utility bills while also contributing to clean energy initiatives in their area. Additionally, panels or other equipment on the property are already pre-installed, making the cost of investment lower. Although, there is a downside — community solar is not offered in all areas. So, when you do find one, best to immediately check availability.
Your rental is your own; it is different from other rental properties. Thus, installing solar panels is a decision that has to be made by you, dependent on what you want for your property. Armed with the right information and a solid understanding of your options, you can make that decision with confidence.
If you found this article helpful, imagine what Real Property Management Distinguished Care could do for you as a property manager! Contact us online or call at 828-342-9683 for more information.
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