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Updated almost 2 years ago on . Most recent reply

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8
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Anthony Ramirez
  • Rental Property Investor
  • Los Angeles
4
Votes |
8
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Is Adding Solar Panels to Your Duplex and ADU in LA County a Smart Investment?

Anthony Ramirez
  • Rental Property Investor
  • Los Angeles
Posted

As a landlord, I am committed to improving my rental property while also being environmentally conscious. Installing solar panels and a new roof seems like an attractive option to achieve both of these goals. Currently, I am living in the ADU and am interested in taking advantage of the 30% tax credit for both the roof and solar panels. Also, take advantage of NEM (2.0) before April 13, 2023. However, I am aware that taking on this loan will increase my debt. I believe this will be offset by the rents I collect, making it a worthwhile investment.

One potential concern I have is that all solar companies require an equipment lien on the solar panels during the financing process. While they claim they can only take away the equipment and not touch the property, it is still something I need to consider.

As a young investor, I am exploring all of my options and carefully weighing the costs and benefits of each. While there are certainly some risks involved with taking on this loan, I believe that the potential benefits in terms of energy savings and environmental impact make it a worthwhile investment. Overall, I am excited about the prospect of improving my rental property and contributing to a more sustainable future.

Most Popular Reply

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Rick Albert#3 House Hacking Contributor
  • Real Estate Agent
  • Los Angeles, CA
1,371
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1,879
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Rick Albert#3 House Hacking Contributor
  • Real Estate Agent
  • Los Angeles, CA
Replied

There are a couple of things:

1. I have a client with an ADU and house and already had solar panels. Tenants aren't paying a premium for it.

2. If you are accruing payments, this can stifle your growth because of your DTI.

3. In my experience with dealing with solar panels on the resale side, no one cared and was willing to pay a premium for it. My clients who have bought solar panel properties has said that it was a perk, but wouldn't pay more for it.

4. Zillow did a study in 2019 and said in Los Angeles it did increase values by 3.6%. That means if you are ultimately spending around $30K, your property better be worth over a $1,000,000 to justify it.

5. The only possible work around is if you charge a flat utility fee. You just have to be careful because if a prospective tenant sees you are charging a fee and they see the solar panels, it could look bad.

6. I lived in my ADU before renting it out. My utility bills were extremely low because of the size. It might actually cost you more to have the payments.

In conclusion, if you do it, do it because of personal reasons, not for business. 

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