All Forum Posts by: Andrew Smith

@Lesley Resnick JEA are a nightmare for solar right now FYI. Their net metering rates are really obnoxious and actually basically stop us from being able to offer solar in JAX. There is a lawsuit going on currently to combat that so that would be something to research for sure.

Hi @Brian Leppla,

I work in solar. Both leases and financed ownership are available with zero out of pocket assuming qualification. The differences are pretty stark though in terms of consequence of which you choose. Leases will typically result in a lower monthly payment, but ownership - even financed - has significant benefits.

Fannie Mae explicitly do not allow leased systems to be appraised as part of home value, but do explicitly allow the full value of owned systems to be appraised.

With ownership you get the Federal tax credit of 30%, with leases you do not.

With lease, a lien is put on the home as a guarantee. With ownership there is no lien on the home, but instead a UCC1 filing on the equipment only.

We use a study from Lawrence Berkeley Institute that shows a $15-20,000 expected raise in value by going solar with owned systems. With ownership you should expect a raised value. especially as Fannie Mae allow their appraisal if owned.

The other consideration is that solar on new construction is mandatory in CA starting Jan 2020. Homes without a system will then be competing with solar equipped homes. That will likely have a negative value impact. Homeowners going solar now then protect against that and enjoy the tax credits that are going to diminish starting 2019.

Overall then, buying a system, even with zero down finance. should raise the value of your property and in SoCal will likely offer highly significant savings compared to the utility. Leases not so much and leases do cause escrow issues too because of the home liens. Leases are good options for those unable to claim the tax credits and who want to lower monthly cost and are unconcerned about home value consequences.

I am a proponent of solar, so happy that you'd go solar with anyone reputable, but if you would like me to put some numbers together for your home specifically so you can compare ownership with lease, let me know.

Best, Andy

@Lisa Kohl I have sent this information to my colleague in Idaho

Hi @Terre B. Leased systems yes. They are not allowed to be appraised. Owned systems are allowed for appraisal. They also have a UCC1 filed on the system as equipment and no lien on the property.

@Jeremiah Leonard

For flips I don't think solar makes anywhere near as much sense. You have to cash buy the systems rather than finance (at least with the solar finance offered). While they appraise and it's definitely doable to get dollar for dollar, that's not really what you're looking for. In some markets it will make the home easier to sell without question and I have customers who added systems for that reason. 

In CA it will make increasing sense as it is mandatory for all new construction under three stories to be equipped with solar systems starting Jan 2020. That means if you're flipping in CA you'll be competing with brand new homes that are solar equipped.

@Peter Padalino the other advantage of adding solar is that it is building credit with the utility when the property is vacant. Power is being generated and sold to the utility but little is being consumed in an empty property.

@Jeremiah Leonard,

If you own the solar through cash purchase or finance, it will add value to your home. This is according to NAR and other studies. If using zero down finance, you have no out of pocket and you can have your tenants pay the monthly for the solar system (with a caveat that if they use excess power from the utility they are liable for that).
In that scenario, you've added value to your home, your roof is an income producing asset instead of a liability and you are having that paid for by other people. Seems a good deal to me. I am in the industry for full disclosure.

Hi @Yiming Li How old is the lease? I would negotiate a purchase price with the seller that would be a (low) percentage of the $40K owed. You'd then own the system and add value to the home (leased systems do not).

It's hard to imagine how $40K is still owed on a lease if it's been in place for a while and if it's new, why the heck would they add solar to a roof that needed replacing? (another negotiating point). 

Hi @Thomas N.

It would totally depend on what the underlying utility bill would be without solar - if it's going to result in a $150 bill for tenants without compared with $100 with then better to keep. I would see what it would take to pay off the leased panels and own them either cash or financed. Leased solar systems are not able to be appraised, whereas owned systems are. If you own the system and then you are having your tenants pay for them while they benefit with lower monthlies - win-win.

Hi @Gloria Washington

The benefit of going solar at the same time as a roof replacement is that the Federal Tax Credit (currently 30%) applies to the roof as well as the solar system. In other words you receive a 30% tax credit on the solar system as well as a 30% tax credit at the least on the roof that is under the solar system (full roof 30% depends on the advice of your CPA).

Couple that with the roof now becoming a producing asset and offsetting the utility bill instead of a liability and the increase in appraised home value assuming the solar system is not leased then going solar makes a lot of sense at the same time as replacing/repairing a roof.

So in short you don't "get a roof if you go solar", but there are certainly advantages to adding solar to a roof replacement.