Generating Cash Flow on Long Term Rentals through Solar Panels

[Travis Holmberg]

Hey all,

I live in sunny Phoenix Arizona and have been throwing around an idea in my head I'm wondering if anyone can validate or invalidate for me.

My idea is to install solar panels on my SFH property and rent it out for a long term rental. When you have solar panels on your house, at least in Phoenix, they install a second meter for the energy generated. Then the local power utility allows you to choose different plans revolving around that energy generated. One plan sells the energy generated to them for $.0281 per kWh produced and then you buy back energy for various price points depending on the time of day and year ranging from $.069 to $.24 per kWh consumed.

I've called SRP and they said that they do not allow you to have two separate accounts for each meter, but I'm still not sold on if that person fully understood what I was talking about; since multi-family homes have one family per meter. So ideally I would keep the energy creation meter in my name and the energy consumption meter would be in my tenants name.

If that doesn't work, my thought is to keep the energy bill in my name and then charge my tenants for the energy consumed every month, while taking the energy produced as cash flow.  I'm not sure if that would be creating unforeseen issues though?

Running the numbers on the average solar installation in AZ and the average energy consumption i'd be looking at about $200 a month for a $15,000 solar unit. Then with the federal and state rebates it would pay for itself in around 6 years...not including the average of 4% increase in home value that solar panels provide. If I loosely follow BRRR and find a slightly distressed, but nearly turnkey property where I can invest $5kish in fixes then another $15k in the solar installation and then refinance after, I might be able to utilize that 4% home value increase to further decrease the return time on the solar panels.

I'm wondering what all your thoughts are and what I'm missing?