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All Forum Posts by: James Smyth

James Smyth has started 3 posts and replied 24 times.

Post: Solar Panels for a Rental - Akron, OH

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13

The ROI on solar is more complicated than a one line answer on a forum post.

For roof-mounted solar, you need a roof that is oriented well and gets good solar exposure in order to produce power. Whether it is profitable depends on the cost of electricity from your utility; your local/state incentives and net metering policies; and the cost to install the solar panels.

A pretty easy and quick way to run ROI on a solar system is to use this tool put out by Google: https://sunroof.withgoogle.com/

If you look at my post history, I'm in a similar situation and I will be going forward with solar when I do my roof. I have been looking into purchase options, but I might consider a lease option because it wouldn't go against my DTI when I purchase another home. But this is what the Google Project Sunroof says for my house:

Loan Option:

Lease PPA:

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Elbin Collado:

@James Smyth, if your going to go solar, choose the best product, SUNPOWER panels are the most efficient & have longest warranty.

I'm between Sunpower and Tesla Solar Roof. I am leaning Tesla because it is cheaper and I don't like the idea of the penetrations.

Post: 6 months old paint - is it useable?

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13

My bet is the paint is still good.  If the paint looks good, it is probably good!  When I've had paint go bad it had separated and started to curdle almost like spoiled milk or smells like it has gone bad.

As previous posters have advised, it is always best to paint an entire wall at the same time.  If the walls were painted recently the touch-ups won't be super noticeable.  Hopefully your tenant was in there for at least a year and in that case, it will definitely be noticeable!

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Alisa O.:

James, 

You already have the answer. In your situation it makes sense. There are only 2 points I would be interested in before I signed the contract: 

1. You mentioned those newer Sunpower panels that would guarantee 92% efficiency at year 25. I would be interested in their cost. 80% is good, but 92% will allow you to use the panels a bit longer than 25 years (if the actual roof will withstand). Who knows, you might squeeze a few more years out of them. Even if you are making $3000 or ever $2000 vs $4000 at optimum capacity, I don't think you would find it too offensive. Also, you already know the Sunpower technology exists and is out there. If the cost makes sense, I believe its better to buy the latest more efficient model if the funds permit. As an analogy think of it as buying this year last year's model. 

2. Biden is seriously pro "green" and alternative energy. He wants to invest $400 billion over 10 years. Even if he doesn't get the full amount, he will continue pushing to get something. I see additional tax credits and incentives in the near future. Can you wait a few months to see what he will come up with? You might find it beneficial.  

My friend is one of the pioneers in solar energy farms in Erie County NY built a solar farm with his business partner. Right after they bought a hotel and converted it to the apartments and everything to electric.  They will use energy from their solar farm to energize the building. He was telling me his numbers and they sound really attractive. The bank really loved that solar component as well. Whats interesting in his situation is that he will be offering an all inclusive rate for the apartments. Tenants can budget the same amount every month and don't need to worry about the additional bills. While my friend will have one bill for the building, which he would cover with the solar credit from the farm, the tenant essentially would save the base delivery rate for gas and electric, even if they don't use any utilities. For some tenants this saving is crucial and one all inclusive apartment bill is a huge benefit. My friend and his partner will get extra income, just like you will. Our cost in Buffalo is about 18c/kwh and it still makes sense to go solar. 

You are on the right track. 

Alisa, 

Really great points, I honestly hadn't looked very close at the numbers between Tesla and Sunpower because the idea of a Solar Roof that is cheaper (after incentives) than a standard roof was just too appealing to not discuss with the BP community straight away!

I took a closer look at the Sunpower vs Tesla; long story short is that the Sunpower costs $5,453 more upfront and it produces $19,495 over 25 years.  This comes out to a 5.45% annualized rate of return. Since this is still $0 down the cash on cash is "infinite". The major concern with the Sunpower roof is that they're putting lots of holes that are warrantied for 10 years in a 25-50 year asphalt roof...

I will look into any indications for potential Biden proposals closer before I move forward.  I imagine most incentives will likely be qualified based on when the system is put in service, which between the Tesla backlog and the permitting lead time could very well be the end of this year and likely would qualify for new stimulus legislation.  The 26% federal investment tax credits where extended for two-years with the most recent stimulus package, so there is no longer a rush on that front.

I find it really interesting the solar farms that are being installed in upstate NY.  If large-scale solar makes sense this far north, it has to make sense in other areas that have better insolation.

Details of cost analysis:

Post: Solar on Rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Ronald Pryce:
Good day, everyone... does it makes sense to put solar panels on a rental property? 

property is in NYC

con Ed is Ridiculously getting out of hand with their electric bill.

to lease the panels its zero down and $138 after 2 months from instalation and my con ed bill would be roughly $20.

 Ron,

I live near you in Long Island, the numbers will be different because you're ConEd in the city but I think the analysis I ran and presented in my post might help you think about solar: https://www.biggerpockets.com/...

In my case it pretty much a no-brainer because a need a new roof and I can finance the roof with the solar for zero down. After incentives the cost of solar over just doing the roof in nominal.

From what I understand the NYC has a good property tax abatement if you go with solar?

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Aigo Pyles:

In reality solar power for rental property is not a good idea. First of all it's expensive. Second, you will not pay for the utility of your tenants. Third, the hassle in the maintenance of a solar panels. Fourth, panels affects the aesthetics of the roof. And when you decided to sell it, the some people might not want solar panels for the property. 

What if I'm putting in a new roof and the cost to install the Tesla Solar Roof after incentives is cheaper than a traditional asphalt roof?

What if you charged you tenant utilities as additional rent? Make it a monthly balanced bill with an annual readjustment to make it easier.

What maintenance are you anticipating on the solar?  They have strong warranties and they don't have any preventative maintenance (unless it's been really dry and dusty, then you might want to rinse dust off).

What if the solar panels are built into the roof and have the appearance of a luxury product?

At resale time, on average solar increases property values by 4.1%

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Tanya F.:

So great that you're doing this!

Numbers look good to me, NY is better than WI where the numbers also look good. We've had solar on our rental since 2011. Just expanded the system in 2019.

How has your solar done?  Was production in line with estimates?  Have you received the benefits you expects?  Have you had any issues with maintenance (leaks or service calls for the solar equipment)?

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Kevin Purvis:

I've thought about this, especially since new stick built homes are required to have solar anyway (California), with modular requiring it in a year I think.

I believe it will become more normal for renters to pay back electrical.  

I also believe that renters are not idiots and are fully aware of benefits of a property with panels, and can calculate those savings.

My main goal when I rent is to rent out to people who stay 5+ years.  Obviously this is not for everyone and doesnt work in all locales or for all kinds of properties.  But for long stay renters, things like this matter a lot.  They know they are getting a good deal, so even if you cant increase rent the full amount the first year, you may make up that amount in reduced vacancy, later increases and/or overall easier tenants.

TLDR I think its a good move for nice, 3 bed+, 1500+ sq ft properties in stable areas with highly filtered tenants and high energy costs.

It is interesting how California is going to require solar on new builds, with the distribution problems in CA in sounds like a good idea.  Once it becomes a standard you'll see many people become much more familiar with it and it won't be so much "good luck finding someone to service your solar"

In NY there are incentives for commercial RE to install solar and leaseback the cost to the tenant.  I haven't heard of many people doing this in residential.

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Adam Martin:

I really like the idea of solar and at some point plan on getting it for my personal house. My biggest problem is the upfront cost but you have found a way to get it financed as well as we have low utility costs in KY so it is harder to justify the upfront costs. The prices keep going down which makes it more appealing but also leaving me wondering how much lower it could go so I wait. I also think the new administration is going to offer additional incentives, with more people switching to electric vehicles the power has to come from somewhere. For a rental however I don't see it making sense on a SFH or multi where the tenant is paying utilities and just adds another layer of complexity for me and another bill if I get a bad tenant who doesn't pay. If you have a multi though where you pay electric I see this as being possibly a good play since you are actually saving money vs. transferring cost for utilities. If you are in an area that allows you to bank overages I can also see this as beneficial but currently my co-op lets me bank them, not get income.

On my purchase I budgeted $15k in the rehab for a new roof, since the solar roof after incentives is cheaper than the traditional roof before incentives, I can finance 100% of the roof for 3.5% and I can keep my cash working elsewhere for more than the 3.5%;  I'm not concerned with the loan payment in the case of vacancy because I already have the cash reserves set aside for the new roof.

If you consider the solar payment is really covering the cost of the new roof (which I had already budgeted for) and the tenant's utility payment is towards the solar.  I am essentially adding a cashflow of $190/mo. This would increase my monthly cashflow by 40%.

Post: The case for solar on a rental property

James SmythPosted
  • Investor
  • Amityville, NY
  • Posts 24
  • Votes 13
Originally posted by @Account Closed:


Short answer, for a rental property, IT CAN make sense, just think it through, especially when it's time to sell.

Agreed! My market has high utility costs, so the ROI might be higher than other markets. But I wanted to share my analysis for others to think about. With the costs of solar coming down, at some point it might make sense for all landlords to install solar and squeeze out another $100-200/mo in profit!

Not sure how much the solar improves the true resale value. According to this article solar increases property values in metro NY by 5.4%; in my case my ARV is $610k and that'd be $33k if true! I'm not counting on this sort of return.