Hi Guys,
I have a investment property in Coober Pedy SA which i purchased in October last year. It is a dugout (underground home) with 3 seperate dwellings each with their own power and water meters. It is a great investment returning about 9.5%. There is however a large power crisis in this town as power is provided by Diesel Powered Gen sets and council has lifted power prices significantly because of rising fuel costs. What i wanted to know is, would it be a good idea to install 3 small (1kw) solar panel sytems, 1 per unit and charge 20% more rent due to the significant saving for my tenants? I know i would pay more rent for the luxury and im sure the savings for my tenants will outway the rent rise. I would love to hear peoples thought on this and also would anyone know if i would be applicable for a solar credits as this is an investment property?
Look forward to your responses.
Regards,
Dave
PS. all are 2 bedroom units, rented for 120 per week.
Hi Dave,
Why don't you ask your tenants whether this would appeal to them? As a tenant, I would be happy if my landlord approached me with something like this as our electricity bills have been increasing significantly over the years. Not sure about the solar credits as it's an IP. Perhaps this is why my landlord hasn't installed some here!? A 20% rise in rent seems to be a bit steep though.
Charlie
There is no question it is a great idea.
However, to pitch this idea to the next tenant is more of the question and that is why I would strongly advise against it. The day that the say owners can bill tenants’ commercial rates for electricity is the only day I would consider putting up solar panels on a rental property’s roof or when green rating becomes huge.Save your money and put it towards your next investment…
I think a 20% increase is a bit steep. Worth asking tenants what extra they would be willing to pay though and then do your figures from that
Holly
Thanks Guys,
I appreciate all your responses Charlie, Kent and Holly . I meant $20 not 20%
but, i don't have the disposable cash, so I better chat to some solar people first to see if i apply for green credits., then gauge my tenants responses.Kent, I guess the reason why I am considering this is that Coober Pedy is going to be in a world of pain if the government won't subsidise the electricity (is has been a significant issue and has been on our news of late). The rate our SA state government is burning cash, this is unlikely to happen!! I guess im am really not thinking about saving my tenants cash, more how to keep my tenants long term and keep them paying rent and a possible tax deduction!
Anyways, it's just a thought, and i truly appreciate everyones opinion.
Cheers,
Dave
Depending on your current tenants, have you considered letting the them install the system themselves in exchange for rental reduction ?
I believe tenants can be eligible for the subsidy (?) so assuming the electricity savings are great enough an offer of a rental reduction equal to the tenants out of pocket expenses could be a win / win situation.Tenant saves money on electricity, sense of 'investment' may help retain long term. You increase property value interest free ?
Not sure if this relates, but I am looking at purchasing a place that has solar panels on it (connected to the grid and drawing a feed-in tarriff). Net result is that the electricity bill comes to around negative $23 per year.
I spoke to the realestate agent who handles our rentals and she suggested that the easiest way would be to put the electricity into my name, pay for the electricy each quarter (which, with current usage is approximately zero) and then bill the electricity back to the tenants (similar to how we do it with water usage charges in the ACT).
Her logic for this was this:
1. We don't appear to have the rent high compared with other rentals in the area.
2. We get the benefit of the rebate and don't have to stuff around ACTEW AGL with changing it later if tenants change.
3. Usage is done this way anyway with water and tenants are used to paying their own water charges so it wouldn't be
4. If they do decide not to pay the charges, it will only be the last quarter anyway and given the net usage cost is zero, it's not like we will actually lose anything.And, while I'd keep the rebate, I'd be likely to offer to pay their supply charge anyway as a way of making it win/win for both me and the tenant (and it saves them a hundred bucks a year or so).
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