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Want the Best Real Estate ROI? Go Solar.

Written by Posted On Monday, 14 March 2016 07:53

When property owners investigate which property improvements will provide the best return on investment (ROI), they have to calculate what percentage of the invested money will be returned to them. Several primary factors play the largest role in that decision, especially for property owners considering installing solar power systems.

Immediate Return

To encourage home owners to “go green” and install energy efficient systems, the government has provided incentives in the form of rebates. The cost of the investments, like solar panels, can be taken as a tax deduction to reduce your personal income tax liability.

Ongoing return

When a homeowner invests in improvements that reduce their monthly utility bills, that is an ongoing savings directly related to the initial investment. Installing new triple-pane windows or adding extra insulation to the exterior walls will result in a reduction in the monthly heating or air conditioning bill.

Property Value

When it comes time to sell the property, the improvements made should have added value to the property. Just how much is open for debate. Spending $20,000 for a swimming pool can sometimes make the property harder to sell because many buyers don’t want the trouble and costs associated with the upkeep of a pool. Remodeled kitchens are a great selling point, but the initial cost is usually so high that it doesn’t translate to a matching increase in the selling price of the house.

Why Solar?

Of all the categories of home improvement investments, the installation of solar panels will inevitably show one of the highest ROIs. Because solar systems replace the energy you have to buy from a power company with “free” energy you generate yourself, the systems are considered money generators. If you’re still undecided, there is plenty of solar information available for interested homeowners and investors who want to learn more about the benefits of solar energy.

Solar Savings

By reducing the need for purchased energy like gas and electricity, figures show that annual energy savings can be lowered by 10% to more than 30%, depending on the size of the system. Even at the lower end of 10%, that’s a far better rate of return on your invested money than from a bank or most stock funds. In some cases, you can even make money each month by selling your excess solar-generated electricity back to the power grid. Over the 25-30 year life cycle of your solar panel system, this can add up to a huge savings.

Expense

The initial cost of installing solar panels and connecting them to your power box isn’t cheap. Currently, the average cost of a 5 kW system would cost around $25,000-$35,000. This cost can be reduced by as much as 50%, however, by taking advantage of utility company incentives and subsidies.

Stable Energy Cost

 We all know how energy prices are unpredictable. External forces play such a large part in the supply and demand factor power companies live with that long-range utility budgeting is difficult. With your own solar system generating a constant stream of electricity, you are not as affected by the normal cost fluctuations.

The Bottom Line - Property value Increase

Studies show buildings and homes that are equipped with solar energy systems have higher property values. Realtors have found that clean-energy homes sell twice as fast as those homes without solar panels. Records also show that solar homes sell for a price 3-4% higher than similar homes in the same neighborhood without solar. On a $300,000 home, that amounts to a nearly $12,000 premium. In this example, looking back at the initial installation cost of $25,000, half that amount could be recouped at the sale of the home.

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Emma Sturgis

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