Solar immediate equity ?

Question

I am trying to get some cash together to by my second home my current home has about $38,000 in equity i have been told by several none investors i can raise my home equity instantly by getting solar panels now i am asking the pros please provide guidance my solar cost is about 40k over 20 years at a 4% with the government paying 30% of the cost by end of the year is this strategy worth persuing

This house i am also currently house hacking 2 rooms paying 90% of my mortgage

James Bigley · Answer

I have never seen a property that has added equity or a higher property value due to solar panels.  They are like pools, you will never get what you pay for them.  They can make things complicated with roof replacement and especially if they are leased.  If I am doing a CMA (Competitive Market Analysis) I never add value for solar panels.  I have never had a buyer ask for them either.  I represent many buyers a year.  I would say stay away from them.

Bill B. · Answer

You will not raise your homes value by adding a lien against it for solar panels. If anything you will lower the value of the house. If you ever want to sell the solar company will either require your buyer to qualify for that debt and payment as well as the house payment or for you to pay it in full. (Up to them and their contract which one.)

I’m not sure how any attempts to refinance or cash out would go. As the original mortgage going away would then put the solar loan in first position, ahead of the refi loan.

But long story short, no, won’t add value, may reduce it. I can’t think of one investor or flipper ever that said they were going to add solar to add value and make more money on a property.

Mike Cumbie · Answer

My personal opinion is "If taking out a 20 year loan, then what I have at the end should have value and be worth something". Example: If I take a 20 year loan on a house I still have a house I can sell at the end of it. Same for a building, land, franchise, gold, Action comics number 1. There is no tech that I would expect to have value 20 years from now. Imagine if you had a roof full of solar panels from 1999? How much more are you paying to have those poor performing things taken off and hauled away?

So I suppose if I was buying them and paying outright and it made sense, then I would look into it. As far as investing in a 20 year payment plan hoping to save $30 a month in electricity to have something obsolete at the end? Not me.

Just my 2 cents and good luck on whatever you decide.

Maximo Pichardo · Answer

Hi Aaron,

I'm currently in Wesley Chapel, just a few miles north from your area. I've put many solar systems up for investment purposes, in fact, the Wesley Chapel property I have is being prepared for an Airbnb initiative. Tell me how much is the average electric on the current property, and I will be able to provide you with good solid numbers that support what you are trying to do. I try to get solar installed on properties I invest, it attracts buyers to the closing-table when present properly. In solar, it either works logically and financially or it doesn't at all as there is no in between.

Steven Ko · Answer

@Rafael Trinidad I believe it is market dependent. Like most rentals, you should try to match the neighborhood.  Here in sunny California, they passed a law regarding new construction requiring solar panels.  If your the only house on the block with panels, then I don’t think people would care as much. But if more and more houses have panels, then I think “keeping up with the jones” kicks in and people want panels :)

Aaron T. · Answer

I would add solar to my Airbnbs, because I pay the electric, however after finance costs and cost of ownership, it does not make sense yet; at least in FL.

Aaron T. · Answer

I would disagree. if you live in Florida, in particular Tampa, TECO has a $16 connection fee, so that is not 100%. That fee also needs to be counted toward the total cost of ownership.

If you are installing solar on an investment property, you would not be eligible for the 30% credit. you may be able to work that with the new homeowner to claim it on their taxes, but again, all tax situations are different.

feel free to lay out real world numbers and examples of properties that have been flipped or sold at 15% valuation.

Aaron T. · Answer

yes, there are several companies that finance. I am not looking to be sold a solar program. I am looking for a solar program to show me here in Florida that when you finance a solar system, break even can be under 8-9 years.

I dont see solar as an investment, it does not make you money as a home owner, until after 11-13 yrs in Florida (financed). If anything financed panels lock you into a contract that makes it harder to sell your home.

Rafael Trinidad · Answer

Thanks mike

Solar immediate equity ?

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