Electric vehicles (EVs) are taking over the roads. Initially, Teslas seemed to sprout like mushrooms in mossy woods, but now all car manufacturers are jumping on the EV revolution. A third of all cars could be electric by 2027. Below, you’ll see just how fast EV cars are hitting the market.
With this type of growth, it’s becoming all but necessary to include chargers on your property. Here’s what you should start thinking about.
What to Consider Before You Add EV Chargers
Multifamily landlords should ensure their property is EV-friendly to boost rental revenue, as many of these EV drivers will be renters looking for a convenient place to charge their cars overnight.
However, adding charging facilities to your multifamily rental is more complex than adding an exterior outlet or stand-alone charger to a single-family home—it can be pricey and complicated. Here’s what you should consider.
Canvass your tenants
If you own a large apartment building, many tenants may already have an EV or plan to get one, so installing an EV charging system is probably a good idea.
However, if you own a single-family home or small multi-unit building, canvassing your tenants about their need for EV charging facilities and whether they plan to buy an EV imminently could save you an unnecessary expense—at least in the short term.
Evaluate the costs associated with adding EV charging facilities
Adding a Level 2 charger for a single-family home is relatively simple. It involves hiring a licensed electrician to check whether your existing panel box supports a 240-volt charger. If not, they will have to perform an upgrade to support it, which could cost upwards of $350, depending on where you live. Chargers can either be installed in a garage or outside, with weatherproof covering.
Retrofitting older apartment buildings can be costly
Costs can rise significantly in multifamily buildings, ranging from $2,000 to $6,500 per unit, depending on the complexity of the installation and the need for electrical upgrades.
If you own an older apartment building, there are many more factors to consider, notably having enough chargers to service all the vehicles and the costs of rewiring, cabling, and trenching to bring conduit to all the charging areas, permitting, and regulations.
Also important is having enough grid power to service the property. Building out your charging facilities so they grow with increasing EV usage will help rein in costs.
Some cities mandate EV charging in new-construction multifamily buildings
The process is more straightforward and typically cheaper for new construction buildings. EV charging can be factored into the layout and plans before construction starts. Some cities, including Chicago and?Salt Lake City, require new multifamily buildings to include the infrastructure needed to support EV chargers.
Whether you own a single-family home or an apartment building, a Level 2 charger (which achieves approximately 25 miles of range per hour of charging) is recommended. Level 1, which can be plugged into a standard 120V outlet, is too slow (it takes up to 24 hours to charge a normal-sized car). Level 3, or DC charging (over 100 miles of range with 30 minutes of charging), is only used in commercial environments, such as charging stations and supermarkets.
Financial Considerations for Adding EV Chargers
Landlords will have to consider exclusive use only for tenants, ensuring that others cannot use your EV to charge their cars. You could also consider having tenants pay for the electricity use, but it’s not a requirement. Fortunately, there are apps tailored to multifamily property use that offer end-to-end payment options, reservations, and monitoring of every charge.
Additional costs to landlords include charger maintenance and upgrades to new models to suit the evolution of EV cars.
Incentives to cover charging upgrades
Many incentives cover the costs of installing charging equipment. Some are national, others are regional. The Inflation Reduction Act provides tax credits for EV chargers installed in certain census tracts.
State and local governments also have their own programs. Depending on the property type, charger level, and whether parking spaces are shared or personal, some can cover all or a portion of the charger’s cost.
Charging tenants for EV charging
EV charging has become a must-have amenity for many tenants, with many renters pressuring landlords into investing—although the right to charge differs from state to state. However, the revenue-generating potential that EV chargers present, such as attracting affluent, eco-friendly-minded tenants, lease renewals, adding charging fees, and higher property values, makes installing them a no-brainer.
Additional revenue from a pay-per-space
By turning each parking space into a fueling station, multifamily owners can charge tenants for use per kilowatt-hour or as an additional monthly fee, which is included in the lease agreement. Building in a $100 profit per charging space is a small price for a tenant to pay, considering they would have to spend time charging their car elsewhere.
Tenants with EVs will usually charge their car for four to eight hours daily, usually in the evening/night. Depending on the pricing the landlord implements, this can turn into a significant revenue stream. A flat fee would be easiest to calculate. A payment plan based on kilowatt-hours used would allow all landlords to build in profit based on their payment amount.
Sustainability is a big draw
Environmentally conscious tenants are usually high earners who don’t mind paying extra to know that their apartment is adhering to ESG targets by reducing the impact of greenhouse gas emissions in the community. Green initiatives are one way to achieve top-dollar rents while being good for the environment.
Government funding
Business owners and homeowners are eligible for a 30% tax credit to help cover the cost of installing EV charging facilities. It is capped at $100,000 per charger for businesses and $1,000 per charger for residential stations. Currently, there is a considerable government incentive to switch from fossil fuels to sustainable energy, which is in accordance with the country’s overall shift away from coal, gas, and oil for its electricity needs. However, these tax incentives are unlikely to last forever as more of the country converts.
It’s a good idea to install charging stations while government initiatives exist. According to a multifamily ROI charging calculator provided by ChargePoint, if an investor spent $11,200 to charge 10 residents’ cars, they would make back their initial investment in 1.6 years. Their annual net profit after recovering their investment will be $6,858—well over 50% ROI per year.
Solar-powered EV stations in the Sunbelt states
In states that get high amounts of sun, pairing your EV charger with solar panels with a battery or other solar storage could be a great way to lessen the grid load, pulling electricity out of the sky to charge your tenant’s car—for which they pay—while keeping your overhead down. Multiple types of EV solar panel chargers are available—from panels installed conventionally on a home’s roof to mass carport panels to single-space solar charging.
Final Thoughts
With the focus on making the U.S. energy-independent and achieving sustainable energy goals to fight climate change, there’s little doubt EVs are here to stay. This presents another opportunity for landlords to receive additional income to offset the installation expense and ultimately help increase positive cash flow.
Whether you rent a single-family home, apartment, or mixed-use building, investing in EV charging facilities is future-proofing your investment. After all, you provide a service to your tenant: charging convenience and less time spent at a gas station or charging facility.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
