Rental Property Investor · Los Angeles · Member since 2021 · 8 posts · 4 votes
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.
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
3y
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.
Realtor · Minneapolis, MN · Member since 2017 · 47 posts · 30 votes
3y
Anthony, One thing I want to make sure you’re aware is that the tax credit doesn’t cover the new roof. You’d only be able to claim for the portion related to the solar only. This is a big misconception that many solar reps still tell people.
As always, be sure to check with a CPA regarding that but this is taken directly from energy.gov:
“IS THE COST OF A ROOF REPLACEMENT ELIGIBLE FOR A TAX CREDIT?
Sometimes. Traditional roof materials and structural components that serve only a roofing or structural function do not qualify for the credit. However, some solar roofing tiles and solar roofing shingles serve both the functions of solar electric generation and structural support and such items may qualify for the credit. This may change based on additional guidance from the Treasury Department.”
I love that you’re thinking about the environment though. That’s a huge passion of mine.
Do you pay utilities or are your tenants on their own meter and they pay it? That makes a difference on the investment side of things.
I’d be happy to connect and chat more if you’d like.
Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
3y
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.