All Forum Posts by: Andrew Smith

Fannie Mae allow the appraisal of owned solar systems whether financed or cash paid and disallow leased systems or PPAs. Ownership is the ay to go if possible. Solar systems all look alike but literally each property is different because of anticipated usage, roof aspect, shading or no shading etc., so you'd run the numbers on each one. 

In Russel's market panels apparently reduce property value but every other national study shows a raise in value including the NAR and Zillow. The average across the country is around $4/watt of system value so an 8kW system would be 8000 x 4 or $32000 in expected value increase by the national average from studies. At the end of the day a home is worth what a buyer will pay for it, but these are numbers from studies. HUD and DoE also show solar homes sell on average 17% faster.

As I said thought each market is different so run the numbers on yours. In the case of SoCal, we just delightfully received a 14.6% increase overnight in Edison utility rates. Makes a zero down fixed loan on a solar system look pretty much instantly more attractive!

@Kenneth Burdick I'd say that would be the case.

Most people who have a solar loan would pay it off and add the value to the property per Fannie Mae ability to do so. Transferring the loan on the face of it is simple, but almost always requires a 650 FICO. This should be no issue but possible a home buyer will take a ding in the house purchase itself and/or may be sub 650 to begin with depending on the mortgage.

 Thanks Steve and yes happy to help to see if the numbers make sense.

San Diego offers about the best conditions in the US for solar. The utility rates are among the highest in the country so the savings with solar are likewise some of the highest in the country so as an owner of the systems the ROI is among the fastest and largest.

While value is subjective, there are many studies that show value rise with solar and also show solar properties spend less time on the market. The average of these basket of studies show a value increase of $4/watt - so a 10kw system would be a $40K increase in value. The average time on market from these studies is 17% less for solar properties. Again these are averages from a group of studies so may not be your circumstance.

The crucial part is that Fannie Mae explicitly allow for the appraisal of owned solar systems - cash paid or loans, but explicitly disallow leased systems or PPAs. That is the #1 reason that the ownership model makes way more sense for most property owners.

While we are contracting around 1000 systems/month nationally, we're actually head-officed in Encinitas. I can give you all our company details if you'd like and you can research us to determine if we're reputable and I'd be happy to run numbers for you if so.

To get the permit and/or financing the solar system needs to be in the name of the property owner. A tenant therefore cannot install themselves. If all they are doing is providing you with the funds to do it, then of course you could do that but no idea why they would come out of pocket to that level, and they would be unable to use the zero down solar financing.

That said, you as property owner could and then include power in the rent, ensuring that they are still on the bill from the utility co so they are responsible for power in excess of that produced by the system if any.

As a landlord, solar can certainly be a great idea for you as property owner and for the tenants who will potentially save monthly. You will have an investment with other people's money and they will save.

Every property and circumstance is different for solar and if you are interested, be sure to run the numbers with a reputable solar company to see if it makes sense for yours.

Thank you - much appreciated and your post is right on the money as always. 

As far as the solar goes, it's one or the other - 26% ITC or accelerated depreciation. As far as the roof goes, many interpret the code (IRS 5695) to include roof work as "work necessary to install the solar system". Of course this is 100% a question for a CPA. We have seen some CPAs not include roof work, some include whole roofs and some (and most commonly) include the square footage of roof work that is under the panels. In this scenario if 50% of the roof was under the panels they apply 50% of the roof cost within the 26% ITC.

You can get the ITC on multiple properties but again a CPA would base the amount claimed as a percentage of time spent in those properties.

There are a ton of variables. How much offset of existing usage? Is the system paid for in cash or zero down financed? etc. There are a ton of surveys from Zillow, NAR and others that when you combine them show an average equity value increase of $4/watt - so a $10kW system adds by that average $40K of value. Of course averages mean that some places will be higher and some lower.

Our systems have a 30 year warranty parts AND labour. I don't say that as a big up for our systems but because it highlights the reliability of modern solar systems. No one wants to service warranties as margins are not as high in solar as some might imagine. Offering a 30 year warranty then is way more a reflection of how reliable solar is for decades.

As a general rule if the solar panels are being purchased through finance, there's no lien on the home. There is instead a UCC1  on the equipment. Stop paying and they are enabled to repossess the equipment. However, obviously they will be shorted then on the contracted funds and the company will almost certainly pursue payment of that through settlement and/or judgement.

Leases now can follow the same path, but previously they were certainly attached to a lien on the property that would need to be satisfied.