@Matt K. So your right, if your tenants pay utilities then it probably doesn't make sense. Of course during the next turn you could include utilities but that might not make the numbers work either really. My rental in KC is section 8 and apparently the section 8 people will pay a bunch more if you include utilities in the rent. And you don't have to wait for a turnover, you just apply for a different voucher I believe Now, I haven't done this yet- the property manager that I'm going to switch to has though. For me the fact that the rental increase is immediate also a set guaranteed rate which makes everything easier to figure out and more worth it.
Even with this increase the payback on solar is a pretty long term one, like 12 years or so to break even. BUT... there are two other major advantages for me and I'm assuming others as well:
1) There is a 30% federal tax credit. As you can read from the thread above there is some debate over this but assuming that your willing to give it a try and be aggressive with your taxes that's a solid chunk of money. About 7-8K depending on the size of your system. The key is that solar companies know that no one is coming in with 25k in cash to buy a system with a 12 year break even point. So they often provide financing and at great terms. And you can chose to include or not include the tax credit in the price. So if you pay a bit more for the financing (at like 3.79%, very low) then you can get this 8K immediately as a tax credit... basically they give you 8K at 3.8%. That's half of a downpayment on another lower priced rental property and at the lowest terms. They don't mean for a by product installing a solar system it to be an insanely low personal loan on a chunk of money but you can def. do it this way.
2) You can depreciate this system I believe all in the 1st year because I believe it is considered a 5 year item and then you can take bonus depreciation. This is what a solar company told me so I need to double check this! That's a 25K write off on section E though. I make a fair amount from a higher end Airbnb rental... now we are trying to figure how to to qualify it under section E but if we can than I get to finance a system like this at a low interest rate but then take a huge chunk of deprecation where I can write off over half of my Airbnb income for the year using it. Not a bad deal if you have a lot of income coming in on schedule E.
I don't know if that helps or if any of this would apply to your own situation? And disclaimer: This is all theoretical, I haven't actually done any of this yet, so I don't 100% know about the deprecation or the 30% rebate but hoping to soon.
And then, even without the tax stuff it is greener... which is a big deal to me... Its been eating me up that I have these rentals with perfect roofs for solar and not doing anything with them considering climate change. Just decided its time to take action regardless of the cost. But also it is financed so its a small monthly payment and even though it will take a while its not like I'm losing money on it. Even if it is a 12 year payback, after that its a pretty sweet deal. Plus you've locked in electrical costs for the future. I'd hate to see how electric costs in Cali are going to look after P&E is forced to redo the entire electric grid :)
