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. Location, property values, initial cost — these are just a few important details that you need to take note of. Also, a decision has to be made between a single rooftop or a community solar system. One very important thing you need to remember: calculate the math ahead of time. 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! 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. Furthermore, in some states, you can qualify for tax deductions that aid in the cost of installation. But, don’t overlook factoring in your costs into your cash flows before you make any decision.
While solar panels will work anywhere you place them, other placements make more sense in maximizing 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. Furthermore, if your rental house is shaded by trees most of the day, that will interfere in the solar system’s ability to generate high levels of electricity.
Effect on Property Values
Your rental property will gain some value once you install solar panels. However, another detail that might add to your property’s value is the location of your property. Solar panels are simply in higher demand in some places, in which case your property values – and your property’s appeal – may increase. Nonetheless, higher property values may result in higher property taxes, so it’s vital for you to take this into account prior to any decision you make.
Time to Recoup Costs
Generally, it takes a rooftop solar system about six to eight years to recoup 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, expect over ten years before you can notice something of a measurable return on your investment.
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. Besides, installing panels or other equipment on the property won’t be necessary, so the cost of investment is significantly 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.
The decision to install solar panels on your rental is ultimately up to you since rental properties vary. That’s why, with the right information and a solid understanding of your options, you can make that decision with confidence.
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