Solar panels can be a great technique for property owners to save on electricity bills. But are solar panels right for single-family rental properties? While utility costs are an important factor in answering this question, there are several things to remember before going ahead with the installation. The initial cost is a big factor, naturally, but so are things like location and property values. You will likewise need to select between a single rooftop or a community solar system. Finally, bear in mind to do the math. How soon will it take to recoup the cost of your investment?
Cost of Solar
It is an undeniable fact that each solar system will cost a significant amount of money. But it is also true that using money to spend on it could give rise to many great benefits moving forward, dependent on how you structure the initial cost of installation. Even though solar panels and the other required components have dropped in price in the past few years, installing an entirely new rooftop solar system will still run into the thousands.
Several solar companies offer financing or payment plans, letting property owners distribute the cost of the installation over a period of months or even years. And, in plenty of states, you can meet the requirements for some tax deductions that will help defray the cost of installation. Even so, the costs have to be factored into your cash flows before advancing.
While solar panels will work almost in any place, it is still valid that solar power is more sensible in many places than others. To cite an instance, sunny southern states will enable greater efficiency and higher production rates for solar energy, compared to those in places with more cloudy days, that rate will likely be reduced. Likewise, if your rental house is shaded by nearby trees most of the day, that will surely interfere in the solar system’s ability to generate high levels of electricity.
Effect on Property Values
Incorporating solar panels in your rental property will, in all likelihood, affect your property values. Just how much of a result, however, is influenced by plenty of things, especially the site of your property. Solar panels are just in much greater demand in numerous localities, which suggest your property values – and your property’s appeal – may increase. Though higher property values may result in higher property taxes, so it’s significant to account for that chance in your decision-making method or process.
Time to Recoup Costs
As a whole, it takes a rooftop solar system about six to eight years to pay for the cost of installation. That includes the savings on your electricity bill. Although that timespan will diverge greatly upon your property’s area, how much sun your solar panels acquire each day, and so on. For homes in cloudy areas or with shaded roofs, it might take more than ten years before you can begin to get any measurable return on your investment.
Solar System Options
If the idea of a rooftop solar system isn’t appealing, there are other options obtainable. In countless locales, property owners can opt 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. In addition, you don’t need to install panels or other equipment on the property, which means the cost of investment is significantly lower. The major downside is that community solar may not be available in all localities, so it’s salient to make sure of its availability.
No two rental properties are identical, and so in the end, the option to install solar panels on your rental (or not) is one that you will need to make for yourself. But with the appropriate information and a solid understanding of your options, you can make that decision with confidence.
While doing research on every potential income property is a lot of work, Real Property Management of the Triad can help lighten your load. We offer free rental property analyses for investors, which can help you more easily identify whether the income property you want to buy is a profitable option. Contact us online or call us at 336-355-6677 or 336-777-7444 to learn more!
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