Whole house generators are the ultimate residential fail-safe when grid power goes down and we’re left in the dark, but they’re not exactly cheap, and being that they may never actually get used, it’s wise to consider how you’ll net a return on your investment.
As a permanent installation that will be passed on with the rest of the property should you decide to sell your house, it’s reasonable to assume that you might find said ROI in the way of bolstered home value, right?
Well, you’d be correct!
After all, in the event of a blackout in the heat of summer or chill of winter, that generator will keep the household running even as the rest of the world stops turning, and in dire situations, it could even be the difference between life and death!
How Much Will A Whole-House Generator Increase Resale Value?
Studies show that a quality whole-house generator installed by a licensed professional can potentially raise the resale value of a house by 3–5%, which is nothing to sniff at considering the price of property these days.
This percentage equates to round-about a 150% ROI on your initial investment.
For example, if you forked out $15,000 on a generator to secure your home in the event of a blackout, you’d stand to rake in an additional $22,500 on top of the pre-generator property value — Not bad at all!
But one thing the shrewd investor should never lose sight of when it comes to physical assets is depreciation.
How Will Depreciation Impact Generator-Derived Property Value?
Much like a new car will sell for tens of thousands and an old car can be picked up for a song, the value of a whole-house generator is directly related to its age.
Generators are constantly being improved, which means as soon as you purchase and install one, it starts hemorrhaging value. It’s all a little bit like options trading in that respect.
Of course, you can offset this inevitable value decay by taking a future-proof approach when selecting and installing your whole-house generator, by which I mean, if you purchase the best of the best, it’s not going to be superseded for some time. As a result, depreciation will be more gradual.
You can also completely evade time-based value decay by placing your home on the market as soon as the generator is installed, which probably isn’t a very popular option, as, generally speaking, those willing to invest in their home wish to stay there.
However, it does make it an enticing option for property developers who buy with the intention of making a quick sale, or homeowners who are ready to put their property on the market.
If a house is set for resale, and the seller has enough expendable cash to invest in a decent whole-house generator, they’ll be generating (see what I did there?) a 15% profit in what could be a matter of weeks, perhaps even days.
Depreciation Is Offset By Other Returns
It’s certainly disheartening knowing that each day your generator’s contribution to resale value carries out a slow-motion nose dive, but remember, a backup generator pays in other ways that will minimize value decay over time.
Consider this… A backup generator will keep the heating on in the winter when the grid gives up the ghost, preventing pipes from freezing, bursting, and flooding the house.
It will also keep a sump alive and pumping if the power goes in a storm, once again preventing floods.
What I’m getting at here is that a whole-house generator dramatically reduces the risk of catastrophe in emergency situations, and you know who appreciates low risk?
Insurance providers, that’s who.
By installing a generator, you may be down some serious cash upfront, but it’s likely that your policy providers will reduce your premiums significantly.
And let’s not forget that you may well need to use your backup generator at some point, which will add infinite practical value to the investment.
How To Minimize The Depreciation Of A Whole-House Generator?
Returning to the car analogy from earlier, a well-maintained vehicle is always going to last longer and sell for more, and the same is true of your whole-house generator.
An annual inspection and tune-up is considered the best practice.
Not only will this maximize your ROI should you decide to sell up, it ensures you’re taken care of if the power goes out while you still live in the home.
Providing documentation that proves the generator has had regular inspections and maintenance will offset the impact of depreciation significantly, and, as discussed above, purchasing a state-of-the-art unit will also stop value decay in its tracks.
Bidding Wars: The Home-Seller’s Lotto Ticket
Let’s disregard the property value derived from a whole-house generator for a moment.
This kind of installation is appealing to buyers, increasing the likelihood of a quick sale so you can stick to your plans and reduce losses from stagnation.
But a speedy sale isn’t the only potential perk of a whole-house generator.
The extra appeal of the generator may interest prospective buyers to such a degree that it triggers a bidding war, which may send your property sale price into the stratosphere, giving you an ROI far exceeding that of the meager (comparatively speaking) aforementioned 3–5%.
How much extra cash you stand to collect depends on the depth of the interested parties’ pockets.
Final Thoughts
A whole-house generator is a fantastic way to protect your family and property in an emergency and increase the value of your home, but depreciation can really sting unless you take measures to minimize its effect on resale value.
My advice is to schedule routine maintenance at least once a year and ask for official documentation that proves it’s well cared for and in pristine working condition.
If you do decide to go ahead with the installation, don’t forget to contact your insurance provider and tell them the good news.
Granted, a whole-house generator isn’t by any means a small investment, but it can pay off if you’re smart about it, especially if it facilitates a buyer bidding war when the time comes to sell up and start a new chapter in your life.