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? Although utility costs are significantly important in this discussion, the installation entails other details, too. Of course, the initial cost matters, but so does location and property values. Then, you will have to choose between a single rooftop or a community solar system. Finally, do the math. 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
There is no sugar coating it: solar systems will definitely cost you a lot of money. Even though spending might seem tight at first, if you structure your initial cost of installation wisely, great benefits will follow. 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. Not only that, in some states, but you can also qualify for tax deductions which can help pay for the cost of installation. Even so, don’t forget to factor in your costs into your cash flows.
Although they will work in most places, solar panels need to be placed in strategic areas for efficient 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. Moreover, if your rental house is almost always 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 ways, however, to add value to your property; one of which is the location. Don’t forget to take that into consideration when making any plans. Solar panels are simply in higher demand in some places, in which case your property values – and your property’s appeal – may increase. Keep in mind that higher property values may result in higher property taxes, so it’s important that you know what you’re getting yourself into before making any decision.
Time to Recoup Costs
Usually, it takes a rooftop solar system for about six to eight years to recover the cost of installation. This, of course, includes the savings on the electricity bill. The length of time will be dependent on other factors like your property’s location, and how much sun your solar panels get every day. For homes in cloudy areas or with shaded roofs, expect over ten years before you can notice something of a 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 elect to be involved 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. Besides, installing panels or other equipment on the property won’t be necessary, so the cost of investment is significantly lower. The downside is that community solar is not widely available, so always check the availability in the areas where they are present.
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. However, with the right information and a solid understanding of your options, you can make that decision with confidence.
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