All Forum Posts by: Steve K.

@Danny Grey I design and sell solar for a living, and I can tell you, you'd be surprised how many of my customers are conservatives (some as far right as it gets). Originally solar got it's start as a solution for unmanned remote oil extraction facilities, it's not as black and white politically as you might think. Janet Brewer (R-AZ) and Chris Christie (R-NJ) support solar in their states, Georgia as well. Conservatives like having the freedom to make the best choice. 

@Account Closed Backup power is a luxury item for those that desire or require it, mostly unrelated to the CA mandate that this thread is about, as the mandate doesn't require battery backup so we're getting off topic. Just buy yourself a cheap generator and install a critical loads panel with manual transfer switch if you want the cheapest option for backup power. Problem solved and you don't have to go solar if you don't want to. If you want it to be silent, seamless and not require fuel, you can pay more for solar with battery backup and auto transfer switch, but like I said it's a luxury item and uncommon, just a tiny percentage of most solar installations.  

@Andrew Smith Haha we're stepping on each other's toes again. I need to refresh my screen more often. You got this buddy, I need to go shovel snow now anyway lol. 

@Jim D. there are a lot of solutions currently in the works for solving the duck curve issue. NREL first recognized the issue in 2008 and since then many steps have been and are being taken to modernize the grid to be able to handle 100% renewables: 

1) Target energy efficiency to the hours when load ramps up sharply

2) Acquire and deploy peak-oriented renewable resources 

3) Manage water and wastewater pumping loads (7% of load)

4) Control electric water heaters to reduce peak demand and increase load at strategic hours

5) Convert commercial air conditioning to ice storage or chilled-water storage

6) Rate design: Focus utility prices on the "ramping hours" to enable price-induced changes in load

7) Deploy electrical energy storage in targeted locations

8) Implement aggressive demand response programs

9) Use inter-regional power exchanges to take advantage of diversity in loads and resources

10) Retire inflexible generating plants with high off-peak must-run requirements

Our electrical infrastructure is dated and in need of improvement anyway, adding more solar just forces us to deal with an already underlying issue. 

@Account Closed Batteries are rarely included in modern solar installations. Instead net metering is used. Net metering is when your billing meter is replaced with a bi-directional meter, which spins backwards during the day when the sun supplies a surplus of electricity, and then spins forward at night like a normal meter would. The surplus kilowatt hours produced during the day are credited to your account in what is called your "solar bank". Solar installations are designed to match a buildings usage as closely as possible so that the surplus energy produced during the day offsets the energy consumed during times when the sun is not shining. Essentially the energy is stored in the grid much like a battery, but without the need to install actual batteries. Net metering policies vary by utility but most are calculated annually so that the surplus produced during summer months offsets winter months when days are shorter and panels are covered in snow, etc.  

Battery backup systems are used primarily for remote locations when it is less expensive to include batteries than it would be to get access to utility power, for example a remote cabin where running overhead lines in and possibly adding a transformer will cost a lot of money, solar with batteries may be cheaper. Also some people desire battery backup for reasons like critical power loads that can not be without power for even a fraction of a second such as life support systems/ important electrical equipment, or "preppers"/survivalists that desire full energy autonomy for peace of mind, or locations prone to power outages where people work from home and require reliable power, etc. But batteries are not common. 

A local installer that specializes in off grid/ battery backup systems would be able to provide you with a detailed quote for a solar electric system coupled with a battery bank sized specifically to meet your energy loads. Prices vary dramatically depending on what loads you're trying to back up, quality of equipment used etc. but a ballpark estimate is $250-300 per battery and each battery provides 3-4kWh of backup power. How long it takes to recharge them depends on the size of the solar array the batteries are coupled with and how sunny it is that day. 

Most solar installers don't even offer battery backup as an option because these systems are very rare and the batteries add a lot of unnecessary expense and complication. Additionally batteries only last 8-10 years whether they're being used or not and add significantly to the embodied energy in the system (batteries are not "green" technology like solar panels are). A normal solar installation will replace the energy it took to produce the equipment in 1-4 years, but when batteries are added the energy payback period is stretched out considerably. For backup power a simple generator remains a more cost effective solution than batteries in most applications. 

Important notes about the CA mandate: 

The California Energy Commission (CEC) worked closely with the California Building Industry Association (CBIA) on this since 2008. 

Applies to new homes and MF buildings of 3 stories and fewer.

Also applies to major remodels.

Approved by CA Energy Commission 5 votes for, 0 against.

Approved by CBIA.

Includes flexibility for building designs/locations unsuitable for solar.

Solar panels do not have to be on the roof, if builders do not want to include rooftop solar in they can choose to access a nearby central community solar array. Community solar arrays are already widespread and available in CA, so shares can be purchased to virtually offset consumption just like one would buy energy from a coal, nuclear, or hydro power plant. 

Arguments for:

Reduction in green house gasses

Improves home owner’s cash flow position by lowering energy bills (estimated average of $80/month in savings)

Solar already widespread and cost effective in CA

Important part of overall effort for CA to get 100% of it's energy from carbon free sources by 2045

Arguments against:

Raises housing prices (expected to raise mortgage payments by ~$40/month on average)

Raises barrier to entry for home ownership

Will double the amount of solar on the grid by 2025, which will be problematic for utilities to manage

Info from the California Energy Commission Website:

http://www.energy.ca.gov/releases/2018_releases/20...

FAQ’s:

http://www.energy.ca.gov/title24/2019standards/doc...

Infographic:

http://www.energy.ca.gov/title24/2019standards/doc...

@Michael Watts I have a great painter who uses Benjamin Moore ADVANCE. It takes a long time to fully cure, like a month, but once that time period is over it’s a very solid paint, almost like a lacquer. Tenants can cause some damage if not careful while it cures, so keep a quart on hand for touch ups. Very happy with this paint overall.

@Chris Hanisco

 Just think of it like this: the situation with the soon-to-be previous tenants will blow over relatively quickly, while your investment is long term.  In a few months when your building is rehabbed and stabilized with quality tenants paying market rent, you'll look back at this as a minor blip. It will blend in with all the other minor blips you'll have dealt with by then.

In the meantime, it may difficult to get your son to understand. I'd definitely get ahead of that, and explain how you're under contract, and that the contract stipulates the building be delivered empty. You need to rehab the building and raise rent in order to make enough money to pay the bank each month, and that's it. 

One piece of advice separate from this tenant situation: don't overdo the renovation. Classic newbie mistake (maybe even the most common one, and I'm in this club so don't be like me) is spending too much on rehab. It's tempting to go overboard making the unit really nice. But keep in mind that you may be redoing much of that work again sooner than you think, like during your next turnover even. So don't go full remodel, just do the minimal amount you need to get your targeted rent, using durable, cost-effective materials. Looking back I wish I had done less unnecessary remodeling, and definitely less worrying about tenant drama. 

You'll still be there leveraging your asset in the wisest way possible long after this drama is ancient history. You're making the right decision, even though it is the hard decision.  

@Chris Hanisco

The commercial lenders I work with do not require bank statements or taxes from the seller. We have to show our bank statements, taxes, and demonstrate that we have adequate reserves to our lender as borrowers of course. But all we need to get from the seller for underwriting is lease agreements/rent roll, estoppels, receipts for any recent capital expenditures and operating statements. I could see how getting bank statements/taxes to help verify the history of the building would be helpful, and it probably doesn't hurt to ask, but in my experience (4 plexes as well as small commercial 5-24 units) it is not a lender requirement nor is it customary.

 I personally wouldn't push the issue. I'm mostly concerned with getting a really good inspection, during which I'm on site the whole time going through crawl spaces, talking to tenants and collecting as much info as I can. Pro-forma rents are based on market data/how much updating I plan to do. Also I just always assume that one of the tenants is Mr. or Mrs. Murphy of Murphy's Law infamy, and have adequate reserves going in to account for that unavoidable fact. @Kyle Mitchell

@Phil K. There’s a famous “murder house” here in Boulder, the JonBenet Ramsey house. It has not had a great track record in terms of being a liquid asset. The current owner lowered the price below $2M while comps with no murder were all over $3M. but still couldn’t offload it. It’s a beautiful house in a fantastic location too. The owner even had the address officially changed, which I though was a pretty good idea. Still no sale though, last I heard it was sitting vacant.