Solar for Multifamilies in Rhode Island

[Emiton Alves]

Hello everyone,

I am an investor who focuses on multi families  (particularly 5 units and under) in Rhode Island. I've recently been looking into the various solar electricity options available to investors in Rhode Island, especially Providence.

The first opportunity is installing solar panels using subsidized government incentives. The way it is currently being pitched, is that investors can install solar for at a subsidized price. If the property is in a sufficient location, this should eliminate utility bills if everything is running on electricity. Though the solar panels should cost a reasonable amount, 200-400/month, the owner must enter a long term contract. If the owner sells before the contract is over, the balance for the panels must be paid in full. Although this may introduce some difficulties, it provides a potential opportunity to eliminate utilities for the home and increase rent by including utilities in the updated price.

Questions:

-Has anyone, multifamily or single family, gone solar in RI?

-How has been your experience?

-Which solar company did you use??

-Were there any regrets or misunderstandings? What did you wish you knew before you went solar?

-How does solar affect the value of a multifamily home? Single family buyers might care, but do other investors care whether or not a multifamily home has solar?

Overall I am trying to understand what might be some drawbacks of going solar. If I was looking to purchase a multifamily using low equity loan option, could this affect me in any way? Are there any affects on taxes? How difficult might this make it to sell if the balance of the panels have not been paid off?

The point of my post is no decision comes without cost, some decisions which seem good now may restrict your options in the future. I am trying to make sure that this decision is right. And if it is right, will not have greater repercussions in the future. Especially since I plan to continue to keep on acquiring properties at a rapid pace.

[Anthony Thompson]

@Emiton Alves I haven't done it, but I have looked into it a few times.

You may already know this, but it only works for some properties based on where the roof sides are facing (I think south-facing is best, but it's been a few years).

The tax incentives change every year and I think generally get worse (less beneficial for you) as time goes on. But as time goes on, the solar cell efficiency increases and (I imagine) overall system cost decreases, so there's probably a relationship there.

My impression at the time was that there are a lot of MLM-style solar companies out there, which always felt a bit pyramid-schemy. A lot of intermediaries hoping to make referral fees, up front and/or ongoing. If I was going to do it, I'd want to really look into the company I'd be signing up with to cut out the intermediaries.

I just wouldn't want to think I was doing business with X, only to find out it's really Y, but my contract is with X, then X goes out of business in a few years leaving me in contract limbo. A bit paranoid I know, but life/real estate is already complicated enough, and this is basically a long-term relationship and physical alteration affecting the property.

(There was a period a few years back where it seemed like solar was the latest MLM craze, and everyone and their siblings were trying to push solar and sign people up for it, to the point where I would hear someone say solar in conversation and just want to run the other way before they could start their pitch 🤣)

If I recall correctly, they also wanted you to have a fairly new roof, so that ruled out some of my properties as well.

I think my main concern was that even though I've held some of my properties for a decent stretch of time (over a decade), to me if I was going to put solar on a property, I'd really be committing to holding it long into the future because I couldn't count on a new buying wanting or being willing to have the solar. Basically, I wanted to keep the flexibility rather than boxing myself into a smaller corner.

For me, if I was committed to holding a property for at least another decade, no matter what, I might look into it again. It's just hard for me to predict the future and I like to keep my options open, so I haven't done it.

That might not even be a rational way of looking at it - it's probably not - but summarizes where I got to when I considered it a few years back.

Also, in terms of multifamilies, I think it makes a big difference if you're paying the utilities or your tenants are. If the tenants are paying the utilities, I'm not sure how much it actually benefits you, but if you are, it obviously helps you a lot more. I know there are utility credits or whatnot, where the electric company gives you a credit or even pays you for your excess generated power, but I was always suspicious (maybe irrationally so) of those rates and arrangements. To me the main benefit would be reducing the power use in the property itself, and any excess generation credit or payment would just be extra/gravy, but I wouldn't want that to be the main thing (for me).

Would love to hear more from actual owners (not solar salespeople 😀) with experience here. I freely admit that I didn't get too far into it, probably again because it was being pushed so aggressively a few years back that I looked at it quickly, made a "not now" determination, and then just moved on.