Will Solar Panels Improve Your Rental Property Value?
The question of whether or not to install solar panels on your rental property is one that must be answered by looking at the numbers. Despite the increasing availability of residential solar, installing solar panels on a single-family house still comes with a large up-front expense. However, if having solar panels on a rental house would help attract better tenants and reduce utility costs, installing them may more than pay for the initial price over the long term. For rental property owners, it is important to consider the pros and cons of adding solar panels to your rental property and, most importantly, whether or not doing so will improve your bottom line.
The concept of using solar energy to power a rental property is an attractive one. Images of $0 electric bills and less reliance on fickle public utility companies are often the first thing that comes to mind when considering the advantages of solar panels. But is that the reality? Unfortunately, the answer to that question is: it depends.
Solar can offer some clear benefits for rental property owners who have high utility bills, live in a prime location, and qualify for tax breaks or other savings. For example, if your rental home is in an area where the property receives a lot of sun exposure, residential solar panels are relatively affordable, and the state may offer an energy credit or other tax incentives for installing solar panels, these are all strong reasons to choose to install solar panels at a rental property. Particularly in areas where solar panels are more common and summers are scorching hot, renters may be especially drawn to rental homes that can offer to lower their cooling bills over the long summer months.
Then again, if your rental property is in a cooler climate, doesn’t have a lot of sun exposure, or is located in a state that does not offer energy incentives or tax breaks, there is likely little reason to invest in expensive solar panels for a rental property. Of course, there are other reasons that solar panels make sense anywhere, such as a need to reduce dependence on a public utility or produce a more reliable supply. But these reasons are much more difficult to quantify, and so are often not easily figured into a cost analysis.
Knowing whether solar panels will boost your rental property’s bottom line can help you make wise investing decisions and keep your property values growing year after year. At the same time, it can be important to have the input of industry professionals when making important decisions. At Real Property Management, we advise our property investors on solid business strategies and best practices, from solar panels and other improvements to tenant screening and beyond. With our expertise, we can make owning quality long-term rental homes a streamlined, profitable endeavor.