Tenant wants to install solar panels. Should I let them?

Question

Hi,

My tenant called me to ask permission to install solar panels along with a power wall installed on the property. They are very good tenants, no issues in any matter for the last 2 years. They have replaced all their cars with EV and now asking me if they can also get Solar panels installed. Though they mentioned that there will be no cost to me, they will take care of the entire project and also willing to 'transfer' to the new tenant or landlord.

Looks like the solar companies consulted and told them that installing solar will appreciate the home value and desirability. I don't believe the same, specially if the panels are leased. I never considered asking solar when I lived there or on my current residence.

Any recommendations and advise will be helpful.

Thanks

Marc Winter · Answer

If you contract with a licensed supplier/installer and have the tenant pay the bill, ok.  Do not let the tenant themselves even TOUCH the panels or power wall regarding the install.  And get in writing from the tenant they understand and agree that once installed, the panels and wall become part of the rental property.

Scott Mac · Answer

Hi Maheswar,

I think tenants should not install anything on the premises. No Solar stuff, No Ham Radio antennas, No Flag poles, etc...

If it were me, (to be tactful) I'd tell them it seemed like a good idea but my attorney advised against it, and leave it at that.

That way you are not getting in to any kind  of perceived Political or environmental disagreement with them, and you remain the innocent middle man.

Just my 2 cents.

Good Luck!

Matthew McNeil · Answer

Ditto what @Marc Winter wrote. Solid advice.

Steve K. · Answer

I'm assuming the equipment would be leased because it is unlikely a tenant would invest in panels and a Powerwall on a rental.  As others have said owning the system via a cash purchase or using one of the many low-interest loan options out there are preferable methods than leasing.

As a solar salesperson I generally avoid wasting time talking to tenants because they can't sign a contract for solar on a house they don't own, and usually the owner can't claim the tax credit on a rental property. If the lease deal is a really good one (lease payments are a lot less than the current bill) then you might at least take a look at it, but be aware that most leases include a "fixture filing"/lien which could cause a hiccup when you go to sell or even refinance the property.

It's very unlikely a tenant is going to buy a solar system and a Powerwall (plus it sounds like they'd actually need more than one Powerwall or even a Powerpack with extra EV chargers since you mentioned they have more than one EV, a single Powerwall wouldn't be enough in a situation like that). However if they are willing to pay for it or even a portion of it, I would entertain the idea. Perhaps offer to split the cost with them or something. But like I said it's highly unlikely the tenant would pay out of pocket and then just gift the system to you when they leave. I can almost guarantee they would want years of free rent or something in return for their significant capital investment. If they are really committed to this idea and willing to pay I would take them up on the offer! All the paperwork would need to be in your name of course; they wouldn't be able to sign a lease, financing documents, net metering/interconnection agreement or claim any tax credits or other local incentives for a system on a property they don't own.

I would also recommend you get a quote for a system on your primary, if nothing else just to see if there would be a big benefit for you. Adding solar to your primary is typically a more attractive option than going solar with your rentals. Depending on where you live, how big your roof is, how much you pay for electricity it could be a good option for your primary.

Thomas S. · Answer

Absolutely not. Allowing anyone to compromise the integrity of your roof places you at risk of water damage. In addition there are considerably increased costs when it comes to re-roofing the property when panels need to be removed and reinstalled.

I see no financial upside for you as a landlord and can invision several down sides.

Christa S Rickard · Answer

it depends on the market as well as the house. I installed solar panels on my home about seven years ago. I live in Tampa so I don't have to worry about getting enough sunlight to justify. Additionally, my house roof is positioned perfectly to capture the sun in the morning and early afternoon. There is a tax break of $7,500 when they're installed. I had a professional installer do them and took out a loan through them to pay the balance of the panels, which comes to $150 a month. I have a larger set of 20 panels on my roof because my house is a two-story building with 3400 square foot. My monthly electric bill ranges from $9 a month in the winter/spring down here to up to $200 in August and September, with a yearly average of $120 per month. In Florida, homes with solar panels tend to sell a bit quicker and a tad bit higher on the value range. Meaning if homes in a neighborhood sell for 300 to 325, all things being equal between two homes, the one with solar panels would sell closer to 325 and then without would so closer to 300. At least that's what I've been told. I'm actually in the process of getting my house ready to sell in next few months, so I'll find out if that was just a sales pitch or reality.

Account Closed · Answer

Not for any type of lease. NOT A CHANCE! There is no way that can benefit you. Those leases go on for decades...I don't care how good of tenants they are, don't plan on them being around in 10 years.

Kris L. · Answer

Seems to me if they want to make major capital improvements, they should buy rather than rent.

Jacob D Adamczak · Answer

@Thomas S.  You should never put solar panels on any house if it will need to be re-roofed within the life of the panels and most solar companies will make you address the roof before they will install.  They also will warranty their system so that if any leaks happen, which is very rare, it is on them to fix.  Many solar companies are licensed roofers, contractors, and electricians.  As for financial upside, it would be potential higher rent and increased home value.  However, as you point out, this is not without risk

Erik W. · Answer

Solar only makes sense if it's done A) Long-term and B) Heavily subsidized via tax credits.

The estimated payback period of solar panels varies with location and cost of electricity, but a good guess is somewhere between 7 - 9 years, depending on a host of variables.  That includes receiving a hefty tax credit (i.e. subsidies from you, me, and the 53% of us who pay federal income taxes).

Leasing is typically the most expensive way to do anything.  Basically paying all of the cost of solar panels + a financing profit margin, and I believe the company that does the install gets the tax credit.  So maybe they pass that on the customers via a price redux, but I doubt it would be the full 30% cost of install that a homeowner would get.

In short, on-site generated solar power is most likely a pipe dream for tenants.

I would not allow this on a rental.  Let them become homeowners and then they can drive as many 4 inch steel bolts into their own shingles & decking as they like.  I doubt insurance would pay for improperly installed solar panes and/or damage done to your roof from leaky brackets.  Plus you would likely have to increase your hazard/fire policy premium, and it may also increase your property taxes if the assessor drives by and sees those nice panels.

If their desire is to "go green" regardless of paying more money, many area utilities will offer customers the ability to purchase some or all of their electricity from renewable sources.  In my area, you basically agree to have the utility company add a "renewable surcharge" to your bill, and supposedly that encourages them to increase their renewable generation capacity.  But you're never guaranteed to get electricity that was only generated by sun or wind.  Whatever is on the grid is what you get.

Tenant wants to install solar panels. Should I let them?

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