Solar Panels to offset cost of Electric Heat?

[Alex Houser]

Hey everyone,

Does anyone have any experience installing solar panels on a rental property to offset the cost of electricity? 

I currently own a "house-hacked" duplex where my wife and I live on the first floor and the second floor is rented. The issue I'm facing at the moment is that there is no gas to the house - everything is electric, including heat and hot water. There are gas lines in the street, but obviously the cost of upgrading the home to gas is considerable (albeit probably less than installing solar.) By way of reference, I'll share that the 3 bedroom, 1 bath apartment we rent goes for about $2,000 - $2200 market rent, and the electricity bills average between $400 - $500 per month. This cost is considerable, and although my tenants pay for their own utilities, I'm wondering if there would be any benefit to installing solar.

Some questions I'm asking myself (and others) are

• Is there any potential revenue creation from installing solar and have tenants pay me instead of the utility company?
• Will installing solar truly offset such a significant electricity cost?
• Will the ability to offset electricity costs for an all-electric home create a wider tenant pool for future rental?
• Is it more financially viable to simply install gas?

Any input or experience you're willing to share would be very helpful and appreciated!

Thanks for reading,

Alex

[Bryan Devitt]

If you paid for the panels (not leased) then you have a set payment for the life of the loan. Gas prices are going to go up more and more as global warming taxes get implemented more and more. So the cost of converting everything to gas will be cheaper initially, it will be far more expensive over the long run. If the system is sized right and you have off street parking you could also add a car charging station as an added incentive to renters. Having electricity and heat included in the price of rent is also an added bonus to someone on a fixed income. As electricity rates climb for other renters, your costs are set so you can collect more on rent to cover that spread but it would all be profit. Have a couple different companies come out and give you their numbers on a system you buy from them privately but also a leased system with their guaranteed numbers (most give you the minimum amount of power they will generate for a lease, which are usually accurate. Buying numbers can say "as much as" and they're not as good for running numbers). Once you get those run a 10 year, 20 year and 30 year projection against a gas conversion and against leaving it alone and how much more you can charge for rent.

[Alex Houser]

That’s really helpful, Bryan, thank you for your reply!

[Max T.]

you will probably need more panels than you have space for

[Matthew Paul]

Natural gas prices have dropped , we are exporting gas now . You wont see a dime from the tenants from solar . I would go with the gas . 

[Tanya F.]

If you don't have ducts installed, or have electric heated water-filled radiators, converting that over to gas for heat is going to be very expensive. Maybe even more than solar. Solar will probably be a better deal, less invasive construction. Do get estimates for the size of PV system that your house would handle. Are there shade trees? Does your roof face south? Make sure your roof is new before you install.  

If your utility offers time of use metering, you should look into taking advantage of that. It pairs well with solar. You can even put water heaters on a timer so they run only off-peak. We do that and haven't run out of hot water. Most heat is run in the evenings (off-peak).

[Thomas S.]

Go with natural gas, solar is extremely inefficient,  since your tenant pays utilities it is the least expensive for you and the obvious decision if your determined to spend money. Personally I would not change from the present set up. It's work this long, there is no reason to change unless you can charge a higher rent. Don't fix what isn't broke.

[Andrew Smith]

Originally posted by @Alex Houser:

Hey everyone,

Does anyone have any experience installing solar panels on a rental property to offset the cost of electricity? 

I currently own a "house-hacked" duplex where my wife and I live on the first floor and the second floor is rented. The issue I'm facing at the moment is that there is no gas to the house - everything is electric, including heat and hot water. There are gas lines in the street, but obviously the cost of upgrading the home to gas is considerable (albeit probably less than installing solar.) By way of reference, I'll share that the 3 bedroom, 1 bath apartment we rent goes for about $2,000 - $2200 market rent, and the electricity bills average between $400 - $500 per month. This cost is considerable, and although my tenants pay for their own utilities, I'm wondering if there would be any benefit to installing solar.

Some questions I'm asking myself (and others) are

• Is there any potential revenue creation from installing solar and have tenants pay me instead of the utility company?
• Will installing solar truly offset such a significant electricity cost?
• Will the ability to offset electricity costs for an all-electric home create a wider tenant pool for future rental?
• Is it more financially viable to simply install gas?

Any input or experience you're willing to share would be very helpful and appreciated!

Thanks for reading,

Alex

The short and likely non-helpful answer is "it depends". Location of home, aspect of roof, size of roof, size of system etc., all factor in to whether solar will make sense or not.

 Solar can indeed be extremely efficient, but may not make sense for this property. Ownership will almost always be better than leasing again depending on your goals. There are different ways to have tenants pay. New leases can contain language for a fee that you'd charge monthly and they would pay the utility remainder on top of that. Existing tenants can sign a lease addendum to do the same. They'd be interested in that if their overall monthly for power is less.

At the bill size you mention, solar will likely be a good bet depending on the other factors such as roof size and aspect. I can run numbers on your specific property if you'd like and you can see if it makes sense or not. 

[Alex Houser]

Thank you for the reply, @Andrew Smith! I'd certainly be interested in running the numbers!

[Andrew Smith]

No worries and I sent you a message @Alex Houser