Middlefield, OH · Member since 2020 · 4 posts · 2 votes
Has anyone ever installed solar panels and then included electric in the rent, pocketing the difference when the solar covers most of their usage? The duplex we're looking at has free gas because there is an easement for an oil well on the property. So we can rent it advertised with heat and gas included. Wondering if including the electric could actually increase our cashflow.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6y
@Beth Anderson There's a lot of factors to consider when installing solar panels. From an energy prospective Middlefield, OH isn't going to produce as much electricity compared to say Phoenix, AZ. COST is the real elephant in the room. What's the payback period for the panels? At best you'll break even for the first 10-15 years unless you save on labor and install them yourself. The last thing to consider is the utility company in your area. They have programs where they "pay" for your extra energy, but some don't. They also have programs where they install the panels for free, but you pay it off with the energy produced.
In each scenario I don't see an increase in rental cash-flow but that's just my take on it.
Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
6y
@Beth Anderson There's a lot of factors to consider when installing solar panels. From an energy prospective Middlefield, OH isn't going to produce as much electricity compared to say Phoenix, AZ. COST is the real elephant in the room. What's the payback period for the panels? At best you'll break even for the first 10-15 years unless you save on labor and install them yourself. The last thing to consider is the utility company in your area. They have programs where they "pay" for your extra energy, but some don't. They also have programs where they install the panels for free, but you pay it off with the energy produced.
In each scenario I don't see an increase in rental cash-flow but that's just my take on it.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
6y
Solar panels if you qualify are actually pretty OK add-ons. In Portland, have a couple of guys with $0 electric in the summer.
Realize though, the panel company will record some sort of UCC (lien) against the property. Check with your primary lender to make sure subord debt is OK.
I don't feel that it would increase rent since to the tenant it is a net-zero difference in my opinion. A tenant may even argue that they use less power than you're charging them.
However, I have a related question whether solar panels increase ARV or from a subjective standpoint from a buyer in a flip situation. Does anyone have experience with this?
Queen Creek, AZ · Member since 2014 · 2k+ posts · 1k+ votes
6y
I would only add panels if you own them directly. We had neighbors who put in solar using one of the big companies that lease the panels to you. When they went to sell their house a few years latter they had to either pay $60,000 to cancel the contract or find a buyer that would assume that liability. It made it much harder to sell the home.
Realtor · Houston, TX · Member since 2017 · 178 posts · 68 votes
6y
Adding solar panels only makes sense for your primary dwelling that you plan to live in for 10-15 years. First of all, if you include the electric but jack up the rent, you are competing with lower rents in the area and have to really sell the idea. Then, when you go to sell the property, you have to think about how much you'll still owe to pay off the panels at closing. Try jacking up the price of the house and then you are competing again with other homes, and if a buyer is interested, it has to appraise high enough. You may be stuck with this house for a long time. Appraisers will only consider the value of the panels if they have other homes in the area to compare them to. Hope this helps. (Don't do it! Ha ha)
Real Estate Agent · Phoenix, AZ · Member since 2012 · 640 posts · 457 votes
6y
Definitely don't add panels on a rental...there's no benefit to either party and it just complicates the lease and marketing.
Adding them to a long term primary residence could make sense. I would try to buy them outright and then calculate my CoC return based on the monthly average savings vs my cash invested. Keep in mind there is a small YoY diminishing return because the panels generate less electricity each year that they age, although this can be greatly offset by rising utility costs (which our local utility seems to do every year).