Recommend Solar Panels for Rental Property?

Question

I am no expert when it comes to solar, but I have seen some retailers advertising 0% down payment and low (0.49%) interest rates for solar panel installation in the area. When I think about both the appraisal + utility cost savings, it makes sense to me that this could be worth the investment. Does anyone have any experience with this? Good idea? Bad idea? What should I be considering (like I said, this is a new idea for me)?

Bill B. · Answer

It probably won’t help the appraisal and will actually make it harder to sell if you have a loan against them as you will have to pay them off at sale since many buyers wouldn’t qualify for both loans. Most tenants think utilities are lower than they are so you will have to charge less than actual utilities or risk losing applicants. (Especially since you can’t include in rent or they will never even look at your property when searching by rent amount.)

If you’re “trying to ave to world”, aren’t planning in selling before the loan is paid off< the roof is less than 5 years old, and don’t mind paying a little every month to do it, go ahead.

you can always click on the magnifying glass in the upper right. This is literally asked monthly if not weekly.

Bruce Lynn · Answer

In many parts of the country they do not add value, and just the opposite can be a big liability.  0% financing is a gimmick when you're paying more for the panels.

Who gets the savings?  Your tenants?   I don't think it is a big selling point to get them to rent from you.

When you exit this investment, chances are you will need to pay off the loan...so many buyers don't want to assume the liability.

Just had a buyer make an offer on a full duplex that had 1/2 solar.  Something like 1400sqft per side and the guy with solar panels was still paying $150/month, so I don't think it was saving him any money.  Fairly new construction to me shouldn't be running a single guy in a place that size more than that without solar.

If the tenants want to be green, they can always buy a green plan from their provider if they are in an area of choice.

One thing many people don't think about is who pays to take them on and off when the roof needs to be replaced.  Around my area we do that probably every 8-10 years even on a 30 year roof.  Also who pays for hail damage?  Some have insurance for up to 1" hail, but that is small hail for us....Is the installing company ready willing able to come take on and off the panels when you need them to.  My guess with many of these companies, is once they make the sale and install you never hear from them again.

Not sure about today's panels, but don't they loose effectiveness over time...so will they still work great 20 years from now.

Honestly I've never met anyone who after install is just saving a ton of money on their bill.  Some electric companies have quit buying back excess, so that can be an issue too.

Jerry V. · Answer

Rob, from a Contractors point of view, I/we do not like dealing with roofing problems when solar panels are involved.  It usually raises the prices for sure! :P  And most (not all) of the roofing companies that are FOR solar panels, get a $% for recommending X company to others or doing it themselves (being honest!).

But, if you decide to do it, try to find a solar company that will also remove/re-install them if/when you have to replace the roof and all.

If you have others questions, feel free to message me.  Happy to help if I can.  (but am in the Dallas, TX area)

J's Roofing

JsRoofing.com

Josh Von Hoene · Answer

There is a TON of misinformation about residential solar panels. Typically most people don't know exactly how the tax credit works, how the financing works, or what happens when the home is sold. I am based in Colorado, but I am a residential solar consultant and would be happy to help clarify. My company partnered with a CPA firm to make sure our clients don't leave any money on the table when it comes to tax time. I would have to double check your area, but feel free to reach out if you want to have a conversation to clear the air. A lot has changed.

Justin Winn · Answer

I’ve had tenants in the past who have asked to make cosmetic changes to my property, they covered the cost. If your tenants are concerned about their electric bill then maybe you can negotiate some kind of deal where they cover either a portion or all of the cost for the installation.To @Leo Ray’s point you’ll want to talk with the solar panel installation team to understand what is the impact to your existing roof, electrical, etc.

Best of luck, and let me know if I can further assist you in anyway.

Leo R. · Answer

This is an excellent question, and I've also wondered about this...personally, I pass the utilities costs on to tenants, so my hunch is that the money the tenants pay for utilities could probably also cover the cost of a solar system (or at least offset a large chunk of the cost of the solar system)....but, I've never taken the time to run the numbers to know for sure...

Although I don't have an answer to your question, one consideration that may be important is the age of the roof--I would assume that once the solar panels go on, it would be a pain to remove them to replace the roof (plus, if you remove them to replace the roof, where is your power going to come from while the roof is being replaced?). Based on that, my assumption is that it would probably make sense to only add solar if the roof is fairly new (or, if the roof is old, replace the roof and then add the solar)....or, if your lot is large and appropriate for it, put the solar panels in the yard and avoid that whole mess...

I'll be interested to see if folks have any good answers to your question...

Recommend Solar Panels for Rental Property?

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