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? Despite having an important role, utility costs aren’t all that you should focus on, as there are other factors involved in the installation. Of course, the initial cost matters, but so does location and property values. And, would you prefer a single rooftop? Or a community solar system? Another thing, don’t overlook the math. Ask yourself how long it will take to recover the cost of your investment.
Cost of Solar
It’s not a surprise that these kinds of solar system panels will cost a significant amount of money. However, spending a lot of money now could lead to great benefits later on, especially when you structure the initial cost of installation wisely. 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. Additionally, in some states, you can qualify for tax deductions that can help cover the cost of installation. Even so, don’t forget to factor in your costs into your cash flows.
Location
It makes sense to place solar panels in designated spots and not in random corners of the property so that they can produce solar power effectively. 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. Additionally, if your rental house is shaded by nearby trees almost all the time, that will interfere in the solar system’s ability to generate high levels of electricity.
Effect on Property Values
If you want to add value to your rental property, having solar panels will do that for you. But, that’s not all there is to it; you also have to consider the location of your property — that is something that could add value, as well! Solar panels are simply in higher demand in some places, in which case your property values – and your property’s appeal – may increase. Be that as it may, higher property values may result in higher property taxes. Thus, take note of this and factor this into any decision that you might make.
Time to Recoup Costs
Usually, it takes a rooftop solar system for about six to eight years to recover the cost of installation. This is inclusive of what you can save on your electricity bill. Of course, there are also other factors to consider; for instance, your property’s location, and even how much sun your solar panels get every day. For homes in cloudy areas or with shaded roofs, it could take more than ten years before you start to see any measurable return on your investment.
Solar System Options
There are other options available, in case you don’t find the rooftop solar system attractive. In some places, property owners can prefer to engage 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. Also, it will not be necessary to install panels or other equipment on the property so the cost of investment will be lower. The downside is that community solar is not widely available, so always check the availability in the areas where they are present.
Every rental property is different. Installing solar panels on your rental is a decision that should be made by you– making sure it aligns with the vision you have for your property. Don’t worry; 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 Sterling could do for you as a property manager! Contact us online or call at 802-861-6468 for more information.
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