Does anyone have solar on their rentals? What's your experience?

Question

Most of my rental properties are duplex and fourplexes. Sometimes they come where there's only one house account for the whole thing. On my biggest one I'm having Iowa Solar install solar on it. What's your experience charging tenants an extra utility fee? Do many tenants resist it, kind of like people want "Free Shipping" would they expect "Free Utilities" or should I be adding a $50-$100/mo utility surcharge into my future leases on this property?

Erickson Sainval · Answer

Unless its cost effective, or personal residents, I find it not necessary. I think its too much of a upfront cost. The less money we can put in the and still make money, the better.

Matt M. · Answer

@Ryan Kopf

I don’t understand your “extra utility fee”. If you don’t have separate meters for each unit, you obviously are responsible for paying the utilities. Build electric and whatever else into the rent. Sometimes you’ll make out, sometimes you won’t.

Adam Martin · Answer

I have been looking up solar recently out of curiosity and could see the use on a multifamily if you are in an area that is good for it but your money may be better put to use just buying additional properties.  I don't think many tenants will pay a premium for it and expect the power to turn on as they flip a switch.  If you are already including electricity in the rent this will pay off for you over time but you should calculate your roi to see if it is the best use of your money.  If you decide to include it in the rent be careful as when tenants are browsing yours will show up as more expensive and they may not look into the add to see that the extra cost is also including electric.  I like the idea of your additional utility fee, while the net rent is the same it doesn't feel like it when tenants are looking.  Also don't forget to look at gov. subsidies and grants to help lower your cost.  With changes in the election and the platform the democrats ran on reducing carbon and sustainable energy there may be some discounts coming in the future.

James Mc Ree · Answer

I think tenants expect the lights to come on when they turn the switch and don't think too much about where the electricity comes from. You might get a marketing benefit by offering a "green" home, but that will likely be more than offset by you charging more for it. That depends on your market. It will be good for the right tenant if the tenant is paying for it.

It looks like this would be more of an investment for the landlord's benefit. You would pay an up-front cost and maintenance to cover a portion of your combined electric bill for the property. You should calculate the ROI on that to determine if it is worth it.

From a tenant's perspective, I think the tenant will look at your property for a price, including the utility surcharge, compared to other comparable properties at their price. They will choose the best value (features, condition, cost, etc).

Ron Galli · Answer

@Ryan Kopf So, whats the point of doing this? You are installing solar on a rental property to decrease electric cost but want your renters to pay you a fee for you putting solar on the roof they rent?

Account Closed · Answer

I'm actually curious as to the maintenance on a solar system?  Would a tenant have to be trained in how to use it?  Do they require extra maintenance?  These are reasons I just assumed I wouldn't want to deal with solar on a rental, but you know what assuming does - I really don't know, so I'm curious as to others' experiences.

Ron Galli · Answer

@Ryan Kopf The way most modern solar works, is pannels have grid tie power inverters on the back of the panels feeding backwards through the meter essentially producing you an electric credit. This is the most inexpensive form and can be installed most anywhere. If the power goes out, your power is still out as they produce no energy without grid energy to wave match. ROI is usually 8-20 years for a home owner, and usually those super low interest rates or "no money down" are often secured by a first lein against your house (no thanks.)

If you had tenant separated meters, they could gain benefit from this and some may be willing to pay you a fee for the "green" energy but I think you would be looking for a niche within a niche.

The next way this is done is all the panels are fed through one large inverter that is tied to the grid and backfeeds your meter. This would have to be a freaking huge inverter $$$ for a 4plex and you likely don't have enough roof to offset the entire energy bill. If your tenants have separate electric you would need an inverter per unit. $$$. Either way, even with federal, state and local tax credits you would likely spend $100k and still have an electric bill. You CAN spend even more money and get battery backup with this mode... so if the power goes out you can have a small amount of energy to run things other than the HVAC or stove... like a medical device. That could be an amenity you could upsell.

You do not have enough roof to go "off grid" 100% solar and in most places it is actually illegal to do so. Even if you did, it would likely cost more than the building.

So... to sum it up:

If you want to poney up the $ to lower your tenants electric bill with solar, you may be able to recoup some of your expenses via fees. If you save me $50 a month I'd personally be ok paying you back for a net even. Some people may not want this additional hastle. It will largely depend on your market.

If you want to spend the big bucks and offer tenants battery backup in a power outage, you could likely sell this service. Especially to people with medical equipment.

If you want to lower your landlord paid electric bill, enjoy the tax rebates and incentives.... AND want your tenants to pay you 10% more in rent because there is a science experiment sitting on their roof.... I think that would be a heck of a hard sell anywhere.

Also.... one final thing to think about: Iowa is a crappy place to install solar. The state enjoys about 4.5 peak solar hours per day on average. Contrast that to Arizona averaging about 8... this means you will be looking at the longer side of ROI. Like analyzing property.... its a good idea to check the numbers people trying to sell you a system are using. If the system puts out 20kWh per day in Arizona you are going to get half that, IF your roof is optimally positioned for solar. Most arent.

Scott Lewis · Answer

@Ryan Kopf

The federal credit is nice when you install them if you owe that year. Be ready to get a calls about the “solar panels are broke, please fix” every time the grid is down for an hour or two.

Christopher Smith · Answer

@Ryan Kopf

Since my tenants pay all utilities for all of my properties I've never seen the benefit of installing solar (and I live in California where solar is getting more popular and soon may even be required for new construction).

I really doubt I could charge more in rental rates at this point although that may change someday too if the state starts to somehow incentivize solar for renters.

BTW I use to live in Davenport many many moons ago, grew up with Roger Craig.

Does anyone have solar on their rentals? What's your experience?

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