All Forum Posts by: Jacob D Adamczak

Do you have a south facing roof with minimal obstructions or shading?  If so, the numbers could certainly work financially. You are smart in not wanting to lease, if you loan or purchase the panels they can be appraised as part of the home value if you decide to sell later on.  The federal tax credit is 30% for any projects started this year, and slowly steps  down (26% next yr) of the next few years.  So besides the environmental and tax benefits, you can benefit financially in a few ways.  If you pay for electricity in the units, its a direct benefit to you.  If the tenant pays, you can write into the lease that they will pay a certain amount for the energy generated by the panels or charge them for their usage of electricity at a certain rate, any after the 5-10 yr payback period, you will be making money off of every solar generated kWh of electricity.  rates and companies are area specific but you can typically find aa 7yr payback and in mot cases less than 10yrs so use that as a general indicator of if the cost is reasonable.

Sounds like a lot of work to be done but the returns look solid,  sounds like you also may have some potential additional income streams with the solar and storage unit.

tax credit should be 30% and the immediate home equity is if its a loan or cash payment, not a lease.

@Andrew Smith  I am curious to how that works.  I know a lot of utilities have time of use electricity charges and its not as simple as multiplying the price per kWh by the quantity used.  They would also still have a charge just to be connected to the utility even if you produced 100% of consumption with a net metering setup.  With all of that complexity, how would you even know how much to charge the tenant in this scenario

A helpful article:

https://www.solarpowerworldonline.com/2018/09/does-solar-increase-home-value/

Another option is to redeploy their system at their new place.  When I worked at Tesla we often would design systems using the existing equipment and transfer it from the old house to the new house when people moved. However, if that is not feasible or desirable, since your system is on a loan, not a lease, your in a better spot.  The cost of the system should be recognized in the appraisal and you should command a market premium for a green home.

Matthew,  What areas are you looking to develop solar in?

Is this a power purchase agreement? Do they have the price they pay per kWh generated?  I would make sure you have confirmation from Edison that they will purchase the power.  Without system size and other info it is hard to say if that is reasonable or not

Congratulations on the new property. Was this an on-market deal?

If you are going to house hack, it is important you like the area you are.  Being from the other side of new York and already having been in the area for five years, you should be no stranger to the snow.  Again for point two, I cannot tell you which area is best to get your MBA, that is a personal decision not real estate related.  I happen to like the snow and the Buffalo colleges.

If you are trying to go without a car in any area, it is an inconvenience.  Especially when you are trying to get started and maximize your profits, I would recommend self managing the property.  That might include running to the hardware store if something breaks.  I personally wouldn't buy a house before I buy a car in any of those markets.  Even bigger cities like Dallas are much different than Brooklyn where you can take the subway everywhere.  If your going to spend way more money on properties in every other market than Buffalo, you can afford a cheap $3,500 car.  

This renovation is why you would want to invest in these houses.  Its value add opportunity, the ability to force appreciation.  In Dallas, it was much more difficult to find this type of property that you could get at a good price, fix up, and build in some equity for yourself.  Savvy investors would seek them out before they kit the market.

The beauty of renting to college students is that you can charge per room instead of per unit.  For example, I paid $500 for my room in a 3bdrm house at college and shared it with 2 other renters.  1500/mo could've gotten me a way nicer place outside of the campus area.  Also, if one tenant leaves, the others are still responsible for the lease, meaning you wont have to worry as much about a tenant leaving without warning. It is true that they don't always take care of the place but you can still charge them a year lease and a high security deposit.   There are plenty of areas close to the hospitals and other areas in the city that would be outside of the college area if you prefer that.  

In dallas I was in a 1440sq ft SFH in a growing area, It was 115k when I got it, left for 155k. The market in that area seems to have settled down a bit, I wouldnt expect that high of a gain in the future.