In a typical rental property, who pays the electricity bills?
In most cases, landlords find it convenient to let tenants pay their electricity bills. This gives the tenant a level of control over their spending on power since they can always take steps to lower the bill. Letting tenants pay the electricity bill also means landlords do not have to pay the price for a tenant’s irresponsible use of power.
On the downside, though, landlords don’t have the incentive to improve the energy efficiency of their property when tenants pay the electricity bill. They can afford to let outdated appliances remain in the home and are often slow to fix problems with the home’s insulation. Most property owners just transfer the costs of these problems to their tenants.
But there are good reasons why you should, as a landlord, think of improving the energy efficiency of your rental property and lowering its power expenditure. Of course, the tenants in your property benefit in a more direct manner when the power bill is lower. But as McKenna & Vane Management in Frederick advises, efficient energy systems can also benefit your real estate business in unexpected ways.
As a landlord, it is easy to understand the value of installing solar energy in your personal home. But seeing the same value in your rental property may be more difficult. That is because there is a significant upfront cost to installing solar energy on a property. You may be asking why you would want to take on this additional burden.
This article makes a good business case for installing solar energy in your rental property. Why is it a smart move to add solar panels to your investment property? Find the answers below.
7 reasons why solar energy is smart for landlords
You save on electric bills
The obvious reason to install solar panels in a rental property is you pay less per unit of electricity generated through solar power than you do for on-grid power. Lower electric bills give your tenants reason to stay in the property for a long time.
The indirect benefits of long-term renters are lower maintenance and operational costs. With a rental’s electric bills under control, it is easier to bundle this cost with the rent in order to improve the profits on your property.
You have more freedom when setting the rent
Since your tenants pay less for electricity, they won’t mind paying a little more in rent. Tenants in a solar-powered home can pay a higher rent and still end up with lower costs than tenants who live in a home where the electricity bill is higher. If a tenant’s annual savings on electricity is $1,800 and you charge $100 extra in rent every month, that tenant still saves $600 each year.
Solar energy is more reliable
Solar energy has come a long way from the older systems that only functioned during the day. Efficient and affordable solar storage batteries mean a very reliable source of electricity that you fully control. With solar panels, you are sure of power at all times – day and night – and you can even generate enough power to send some back to the grid for profit.
You can take advantage of financial incentives
Available financial incentives and rebates help you lower the upfront cost of installing solar panels on your rental property. This includes a federal investment tax credit for solar PV systems in a multifamily dwelling. States also offer rebates for solar installations and there are several solar financing options with very reasonable rates. With these options, you not only lower the cost of acquiring the solar panels, but you get to use the rent paid by tenants to pay off your solar financing loan.
Attract higher quality tenants
Adding solar panels to your rental will let you attract renters who care about the environment enough to want to live in an eco-friendly building. These kinds of tenants not only want more from their rented home, but they are also willing and able to pay for those additional features. That is because such renters are usually more affluent than the average renter. Installing solar panels in your rental home will let you attract higher quality tenants who will stay for the long term.
Increase the value of your property
Without having to do multiple renovations to your property to increase its value, Solar panels increase the value of your property because buyers like the fact that they do not have to go through the hassle of installing solar energy systems by themselves. A lower electricity bill is also something buyers are willing to pay for. Additionally, the money you save on the electricity bill will let you push the ROI on your solar installation above 100%.
Leave a better world for future generations
Installing solar panels in your rental give gives you the chance to contribute your own quota to efforts to protect the environment. You not only secure the future of your investment, as government regulations on dirty buildings get tougher, you also preserve the environment where those buildings are located. Adding solar energy to your property is a service to your own health and wealth.