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 before making a decision. Location, property values, initial cost — these are just a few important details that you need to take note of. Then, you will have to choose between a single rooftop or a community solar system. One very important thing you need to remember: calculate the math ahead of time. Make sure you have an approximation of how long it will take to get back the cost of your investment.
Cost of Solar
If you invest in these solar system panels, know that it will cost you lots of money. Although spending money can bear great benefits in the future, it would all depend on how you structure your initial cost of the 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. However, you still need to factor the costs into your cash flows.
Location
Technically, solar panels will work in most places, however, the placement does matter when thinking of 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. 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
The addition of solar panels to your rental property will most likely add to the value of the property. Other factors 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
Generally, it takes a rooftop solar system about six to eight years to recoup 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, expect over ten years before you can notice something of a measurable return on your investment.
Solar System Options
You can choose from other options if a rooftop solar system isn’t what you want. 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. Additionally, panels or other equipment on the property are already pre-installed, making the cost of investment lower. While community solar has its benefits, it also has a downside — it’s not available in all areas of the country. So, always check for 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. That’s why, 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 Southern Connecticut could do for you as a property manager! Contact us online or call at 203-821-7303 for more information.
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