Raw Land For Solar Ground Lease

[Ben Lake]

Longtime lurker of the forums, finally decided to sign up and see if anyone is actually interested in talking to me.  I'm a weird dude with weird ideas that I process best through discussion with others, so feel free to tell me what you really think; I don't get offended easily.  Anyone with thoughts on this is more than welcome to chime in and discuss.

I'm wondering if anyone has explored the possibility of purchasing raw land with the intent of entering a ground lease with a solar developer, particularly in CA, AZ, or NM.  I'm interested in this idea because once the deal is done it's about as passive as income can get.  The leases are typically from 20-30 years, many with options to extend out to 50.  The idea of making an investment in the next 1-3 years that would generate constant income until I'm older than my grandparents are today is intriguing to say the least.  Depending on a variety of factors including latitude, annual sun exposure, land topography, proximity to cities, state and local government incentives, and proximity to existing power transmission infrastructure to name a few, my understanding is that the lease rates can vary quite a bit.  I've heard figures from about $300/acre/year to $2000/acre/year depending on all those things and probably more.

Having said all that, of course I realize this would not be some plug-and-play money printer.  Although I would do as much due diligence as possible before entering into a purchase agreement, this would be at its core an exercise in market speculation.  One possible mitigation strategy that occurred to me would be to draft a purchase agreement with a longer-than-usual inspection period to allow time for solar firms to assess the lot for its viability.  Alternatively, the worst case scenario I see happening with this would be getting stuck with a few acres out in the middle of nowhere, which is far from ideal but also not a lethal mistake in my view.  The lots I'm thinking of carry around $100 of tax liability annually so it while it would be annoying and disappointing to get the deal wrong it would be far from ruinous.

Bonus topic - So far I've really only explored doing this with solar developers, but I'm interested in the idea of ground leases in general.  Perhaps there are better avenues than solar power to capitalize on these that I'm not presently aware of.  If you know of any you'd like to share please do so here.

Anyway, this is just me thinking out loud more than anything at the moment.  I'm curious to know if anyone on here has experience with this sort of thing, and especially so if there's a major liability here that I'm missing or underestimating should I choose to move forward with this train of thought.