Considerations When Buying a Vacation Rental with Solar Panels

It’s possible that one of the properties you’re considering for purchase as a vacation rental will have solar panels already installed. This can be a positive marketing point for your property in today’s increasingly environmentally conscious world.

Installed correctly, solar panels can be aesthetically pleasing. Their presence is also one of the first things people will notice about a property. So, when you get to the stage of when you’re ready to start the financing process of investing in a particular vacation rental property with solar panels, here are a couple of things you’ll need to consider as a part of your vetting process.

vacation rental with solar system

How Were They Financed?

Your first consideration will be how the panels were financed. The easiest scenario is when the owner of the property financed the panels themselves. Solar panels can add a lot of value to the property. Although the value of the panels decreases with the age of the installation, newly installed panels can add up to nearly $30,000 of value to a home.

If possible, see if you can get an idea of what the previous owner’s utilities ran prior to installation of the panels, and after. This will give you concrete information about how much the panels are saving on the electric bills.

What is the Size of the System?

You’ll also want to have an inspector give you an idea of the size of the solar system. If the previous tenants worked from home and had several family members, the installation is probably more than adequate for a vacation rental property. A smaller system for one or two people might need enhancements. Lower utility bills will allow you to charge less for your property.

What if the Panels were Leased?

Sometimes the property owner doesn’t have the money upfront to pay for the panels, so they finance them by leasing. This situation is not necessarily something that should cause you to automatically pass on the property. It’s important to find out the age of the lease. It’s possible the finance period is almost over. In this case, the cost of taking over the lease will be minimal.

There are a couple of points open for negotiation here. You can work with the finance company to see if you can reduce the amount remaining on the lease. Or you could have the remaining amount on the lease included in the selling price. The cost of solar panels is expected to go down by as much as a third by 2024, so the amounts under consideration can be expected to be less as time goes on.

Have the Panels Inspected

As in any potential property purchase, having the panels inspected prior to signing on the dotted line is mandatory. You’ll want to get an overhead inspection of the panels, which can be done by drone. Make sure the drone has a thermal camera to check for an initial check for defects.

You’ll want to perform the solar panel inspection on a sunny day. This way any defects, such as hot spots, will be more easily detected. The optimum time for such inspections is in the morning or late afternoon, to reduce glare off of the panels. If the sun is directly overhead, you may get too much glare off them and the inspection won’t be able to show you anything.

If possible, do a second drone inspection with an RGB (visible light)  camera. This inspection will turn up the presence of debris on the panels. This is not necessarily a bad thing. It can simply mean that the panels are due for a cleaning, something that hopefully has been a part of the regular maintenance of the panels.

Is There Enough Sunlight?

Another aspect of existing solar panels to consider is whether there is adequate sunlight to support them. If the panels were installed in an area shaded by trees, you not only may not be getting the full benefits of them but may have more cleaning costs associated with them.

If they are shaded because of geographical features on the property, you also may not get the full benefit of the panels.

Previously installed solar panels are not necessarily a negative when considering investing in that property as a vacation rental. They can be a great marketing point for your property as well as aesthetically pleasing. Just be sure to look into how they were financed, and get them inspected for general condition. This will ensure the panels are in good working order prior to you taking over the property.

What Does A Good Property Management Company Do?

Are you a landlord or a real estate investor? One of the biggest decisions you will ever have to make is whether to use a property management company to maintain and oversee the daily operations of your property. Compared to landlords who prefer the do-it-yourself approach of management in order to save money, working with property management companies increases your chances of growing your properties bottom line and enhancing your rental portfolio.

property-management-firm

But what does a good property management company do? Here is a list of essential services you can expect from a good property management company.

1. Effective Collection of Rent from Tenants

If you own many rental units, you understand how cumbersome it can get when trying to collect rent from every tenant all by yourself. This is why you should use a reputable property management company. A good property manager will ensure that all your tenants pay their leases in full and at the right time.

If you have limited time and you want to focus most of your efforts on growing your business, hiring a property manager who is fully committed to the day to day running of your property will be a great investment.

2. Regular Property Maintenance

Dealing with frequent calls from tenants is probably the biggest reason why landlords enlist the help of a management company. Sometimes the tenant’s needs are not very big but the timing and the urgency are. You may receive a call in the middle of the night from a distressed tenant who has misplaced their keys and can’t get in.

Failure to address these issues can result in serious problems with your tenants in the future. Having a good property manager who responds urgently to all property issues will not only ease your burden but also ensure that all your rental properties are optimized.

A good property manager will also inspect the property regularly and make sure that all routine maintenance such as lawn care, plumbing issues, drywall patching, pressure washing, and all other services that tenants may need are handled at the right time.

3. Sourcing of Tenants

It is one thing to get tenants for your rental property, it’s another thing to get the right tenants. A good property management company will ensure that proper screening of prospective tenants is done so that you don’t end up with tenants who are bankrupt or have fully maxed their credit cards and will have problems paying rent every month.

A good property manager will also take time to call previous landlords and also look into the tenant’s criminal history. The last thing you need is a tenant who puts you or the entire neighborhood at risk.

4. Bookkeeping

Bookkeeping is a vital part of property management. Proper bookkeeping ensures that taxes are kept at a minimum, and the cash keeps flowing. A good property manager will ensure that your books are kept properly but if they don’t offer bookkeeping services, they can advise you on where you can outsource a good bookkeeper who will add value to your business.

5. Effective Handling of Defaulters

Sometimes tenants get caught up in serious issues such as breaching of leases while others could be involved in criminal issues. While some issues can be sorted directly with the renter’s other issues require lawyers and even going to court. A good property management company can handle these problems for you and save you the time and agony of dealing with such stressful situations.

The Eco Revolution in Property Investment

Many of us are now making more eco-friendly and environmentally conscious decisions every day. Whether it’s taking our own carrier bags to the shops, having a reusable water bottle or recycling your tin cans – little changes are making a big impact. When it comes to property, the eco revolution has increasingly been making waves. From solar panels to energy efficient light bulbs, our properties are becoming better for the planet. These priorities are also affecting property investment, with an increasing number of tenants looking for eco-friendly essentials in their property.

Eco-friendly homes are becoming increasingly popular with a new environmentally conscious generation starting to look for rental properties. Young professionals who are living in the city are less likely to buy a home than ever before, so are looking for a rental property that meets their exacting requirements. With many of them choosing to make environmentally friendly choices, like going plastic free or cutting down on how much meat they eat, accordingly they are looking for eco-friendly homes too.

Environmental impact is increasingly on the agenda of consumers in every aspect of their lives. Many are also willing to pay a premium for eco-friendly purchases. Research has shown that UK consumers would pay an average 10% more if they were buying something they thought had a positive impact on society. Property investors would be wise to bear this in mind when looking for new property investments. In an increasingly competitive rental market, the ability to raise prices because of eco credentials is a lucrative option for investors.

Furthermore, 40% of consumers think that sustainability is important when they are making a purchase. The impact of this can be seen in the growing number of brands and businesses that are making their environmental commitments obvious to consumers. It is clear that savvy property investors can be both environmentally friendly and business smart when looking to purchase new properties.

In another study, 80% of tenants believed that their landlords should be considering the environment more, and suggested measures like double-glazing, insulation and eco-modifications. These simple measures can make a large impact on the appeal of a property to prospective tenants. Increasing energy prices are another concern for occupants. In addition, 55% of renters asked said they would prefer a rental property with a smart meter if it was the same price. Energy efficient measures are both good for tenant’s monthly costs and for the environment so buy to let property investors can be at an advantage if their property offers these.

As of April 2018, buy to let landlords are legally required to have an EPC rating of E or above in their properties. This means that property investors are increasingly looking at new build properties which are already energy efficient and don’t require costly renovations. Tenants can also legally request that a landlord makes property improvements if the EPC rating is F or G.

Developers are increasingly taking sustainability and environmental impact into consideration when building new properties. Properties with energy efficient specifications, like many by RW Invest  are providing investors with lucrative returns and high tenant demand. Recent changes to regulation mean that new build properties need to be energy efficient and this is making a huge impact on the buy to let market.

The trend towards environmentally conscious properties looks set to continue, with eco-friendly qualities high on the agenda of both potential tenants and investors.