Should you install solar panels on your rental property? Now you may be asking yourself, “why would I go out of my way to spend money on an unnecessary home improvement?” which would be a very fair question. We’ve put this blog post to give you insight into how a property owner like you would benefit from installing solar panels.
You have probably thought of ways to keep your property’s rent costs that let you maximize rental income while staying competitive within your market. Installing solar panels on your rental property is one way in which you may be able to accomplish this.
What Are The Costs Of Installing Solar Panels On A Rental Property?
It is understandable why most property owners do not think of solar panel installation as a way to increase their property’s revenue potential. After all, solar installation costs may seem to be unappealing.
But today, the cost of solar panels has come down considerably. In contrast, the cost of electricity has done the opposite and will only continue to rise.
How much solar panel installation costs are directly related to the electricity a home uses, the scope of work required to install the system, and the types of components selected? There is no shortcut to determining a cost beforehand. Fortunately, you don’t have to sit through long sales pitches if you are interested in solar panel installation on your rental property. In fact, it’s never been easier or less expensive.
Utility costs vs. Solar panels on a rental property
Unless there’s something we are unaware of, property tenants pay for electricity one way or another. If your rental property doesn’t have solar, they’ll be buying power from the grid. What that means for you as a property owner is that you are potentially missing out on an additional rental income the property could generate.
Take, for example, a home in Southern California with an excellent south-facing roof rented by a family of four. Let’s call this family the Smith Family. You, as the property owner, at one point installed an AC unit to weather the hot summer months. Still, the Smiths don’t care to use the AC too much because they are paying exorbitant costs for electricity. The average price of electricity in Southern California is an eye-popping 19.90¢/kWh as of January 2019. Believe us when we tell you since then, it has not gone down, and in San Diego, the cost of tier-one electricity during the summer starts at .29¢/kWh.
To give you a clear picture of what this would look like, let’s assume your tenants, the Smith Family, uses 750kWh on average per month. This would mean The Smiths would start in tier one at .29¢/kWh, and at about 300kWh, they would go to tier two at .365¢/kWh. For the 750kWh the family uses, the Smith” would have an average bill of $248 per month.
Now let us compare the cost of electricity from the utility to what it would cost per unit of power if you had solar.
- If you pay cash at .07¢/kWh = $52/month. Buying solar panels with cash offers you the lowest cost per kilowatt-hour, so the electricity would be at the absolute lowest cost per unit.
- Financing the solar panels will offer you a low monthly payment but a more extended payoff period. If you pay $0 down, finance the solar panels for 20 years at the cost of .12¢/kWh = $90/month. The upside here is you get to pocket a more significant amount every month since this is typically the lowest monthly payment option.
- If you pay $0 down, finance the solar panels for 12 years at the cost of .16¢/kWh = $120/month. While a shorter 12-year term has a higher payment, you still capture additional revenue. You get to a payoff period sooner when you can pocket the entire savings amount.
From 2015 to 2020, the cost of electricity in San Diego Gas & Electric has increased a whopping 70% in price! To tie all this together, imagine the Smith Family is considering two similar houses. One rent at $2,500 per month plus electricity with an average bill of $250 subject to rate increases. The second home rents at $2,750 but includes $300 per month worth of electricity so The Smiths can live comfortably in the house without worrying about getting the shaft from the utility.
How To Maximize Rental Income By Installing Solar Panels On A Rental Property
So what does all this mean for you, the property owner looking to maximize your rental income? You can make your property more desirable by installing solar panels on your rental property so tenants can live comfortably. Beyond that, it means that in the same way your tenants pay your mortgage, they also pay for the cost of the solar panels.
Suppose you install solar panels on a rental property through a finance option of 20 years where the payment is ~$90/month, and you increase the rent by $300. In that case, you are up to the $210/month you wouldn’t otherwise have. Suppose you replace the utility with solar panels. In that case, you collect the payment yourself rather than let the utility have the money.
The best part is that several solar loans do not require you to put any money out of pocket. A secret way of buying solar can afford you even lower rates than solar-only loans. This allows you to maximize rental income even more.
How Installing Solar Panels On A Rental Property Benefits The Landlord
You might ask what other benefits are to installing solar panels on a rental property. Well, it is more common to see homeowners install solar panels on their homes. By that measure, it will only be more common as time passes and electricity rates go up that renters actively look for homes with solar panels installed. This logic is evident in how home buyers are willing to pay more for a house with solar panels. According to Zillow, adding solar to a home increases the value of a home by an average of 4.1%.
The median home value in the San Diego market hovers around $594,000, of which 4.1% equals $24,354. In most cases, that increased value will cover the cost of the system, and the best part is that the tenant will be paying you for that electricity instead of the utility. Again, this means you’ll be able to maximize rental income by installing solar panels on a rental property.
Another benefit is that solar energy allows you to live more comfortably in your home. Those reading in the southern California area know how expensive it is to live here. For people living in San Diego, you really get a feel for the high cost of living in this city. Installing solar panels on a rental property allows your tenants to budget for electricity. Still, more importantly, it will enable them to enjoy living in your rental property during the summer months without paying through the nose for electricity. If the tenant finds comfort in your property, they are more than likely to stay for the longer term, thereby decreasing turnover.
How Do You Go About Installing Solar Panels On A Rental Property?
As the property owner, chances are you don’t spend much time at the rental property, so how will you get accurate quotes without putting the tenant through drawn-out sales presentations? Plus, since the tenant is not the decision-maker, you probably want to be in on that information instead.
DroneQuote as a service is what you will want to use to get quotes for installing solar panels on a rental property because we make the process so easy. Rather than the long sales presentations, we take a different approach. We put together multiple quotes for solar on a home. And all your quotes are delivered online through the DroneQuote dashboard. You will easily compare different options to install solar panels on your rental property in the comfort of your home and without sitting in front of multiple salespeople.
Unlike solar companies that spend considerable time sending salespeople, DroneQuote skips this. We save time, money, and resources. We are highly competitive, almost cutthroat, on solar quotes.
Another reason why DroneQuote can price solar quotes so competitively is that we have multiple opportunities to earn the customer’s business as a broker. Rather than squeezing as much revenue out of each individual sale, we can afford to be cutthroat with pricing because we make your revenue on volume.
Finally, DroneQuote is the only company that will give you a complete before and after drone survey of your roof. We show you how we uphold the integrity of your roof.
Learn more and get started with DroneQuote and get multiple hassle-free quotes to maximize rental income by installing solar panels on your rental property.
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