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. Another factor is the type you’re going to choose: a single rooftop or a community solar system? And don’t forget to do the math. How much time is it going to take to regain the cost of your investment?
Cost of Solar
Should this be something that you consider, take note that solar system panels will cost money — lots of it! 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. 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.
Location
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. 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
Installing solar panels on your rental property will affect your property values. 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. Keep in mind that higher property values may result in higher property taxes, so you must know what you’re getting yourself into before making 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. That already accounts for the savings you get on your 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, it could take a long time before you start to see any measurable return on your investment — ten years might even be the minimum.
Solar System Options
If a rooftop solar system is not your thing, there are other options. 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. 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.
Different rental properties come with different expectations and needs. The decision to install solar panels will solely be based on what you want. It is your property investment, after all. Nonetheless, 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 Tulsa could do for you as a property manager! Contact us online or call at 918-532-7020 for more information.
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