Solar panels or Nah?

Buying & Selling Real Estate
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Solar panels or Nah?

Richard Kelly
Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes

Hello Bigger Pockets Family!

I have a property I am flipping and the home has solar panels on the front part of the roof. It’s not the best for curb appeal but it will help lower energy cost. I wanted to get feedback on keeping them or removing them. Do you think buyers would see them as a potential savings or would they see it as an eye soar that may deter them from buying even with the completed rehab.

Thanks in advance for any input!

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Steve K.
Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
6y

That looks like about a 5kW system. Rough numbers here but it’s probably producing about 7,000-7,500kWh/yr., which is worth about $1,000. There may also be some sort of production payment contract that comes along with it where the utility pays a certain amount for any electricity the system puts on the grid, so there could be some income from the system on top of that $1,000 in energy savings. It would be a selling point for me personally, as I’d much rather get paid than pay. 

You should have gotten some info about the system along with the home, including the documentation about the system like the permit, paid invoice, warranty info, equipment manuals and data sheets, net metering agreement, production payment contract, name and contact info for installer etc. I would look into all that info so you can talk about the value of the system with any potential buyers. There also may be some negative implications with the utility if you were to remove the system, as most net metering agreements are for 20 years and the utility may require you to keep the panels operational until the net metering agreement is over. A call in to your utility, whoever installed it, and/or the previous owner should answer any questions about the net metering agreement, production payments, warranty etc. that buyers may want to know (and you should know as well). 

I’m guessing it’s not leased, because if it is there would have been a lease contract you would have assumed when you bought the house. A lease can be a negative as the buyer would need to qualify for and assume that lease (or buy the system from the leasing company, or have them remove it). Leases can be a hassle when selling the home but if it’s owned, most buyers will probably see it as a benefit to have lower operating costs through a reduced or eliminated electric bill. The Appraisal Institute has conducted studies that have shown a 5kW system adds $20k in value to a home. Zillow data shows that homes with solar sell for an average of 4.1% more. Also, if you remove them you will end up needing to replace the roof. So I’d leave them. 

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  • Angie Shires
    Real Estate Broker · Tyler, TX · Member since 2018 · 193 posts · 143 votes
    6y

    @Richard Kelly Solar panels are not cheap, they may not be the most beautiful thing in the neighborhood but they look like they were professionally installed and in great shape. I'd leave it, it's not everyone's cup of tea...but it is a great selling point for a lot of people! IMHO

    5Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    6y

    That looks like about a 5kW system. Rough numbers here but it’s probably producing about 7,000-7,500kWh/yr., which is worth about $1,000. There may also be some sort of production payment contract that comes along with it where the utility pays a certain amount for any electricity the system puts on the grid, so there could be some income from the system on top of that $1,000 in energy savings. It would be a selling point for me personally, as I’d much rather get paid than pay. 

    You should have gotten some info about the system along with the home, including the documentation about the system like the permit, paid invoice, warranty info, equipment manuals and data sheets, net metering agreement, production payment contract, name and contact info for installer etc. I would look into all that info so you can talk about the value of the system with any potential buyers. There also may be some negative implications with the utility if you were to remove the system, as most net metering agreements are for 20 years and the utility may require you to keep the panels operational until the net metering agreement is over. A call in to your utility, whoever installed it, and/or the previous owner should answer any questions about the net metering agreement, production payments, warranty etc. that buyers may want to know (and you should know as well). 

    I’m guessing it’s not leased, because if it is there would have been a lease contract you would have assumed when you bought the house. A lease can be a negative as the buyer would need to qualify for and assume that lease (or buy the system from the leasing company, or have them remove it). Leases can be a hassle when selling the home but if it’s owned, most buyers will probably see it as a benefit to have lower operating costs through a reduced or eliminated electric bill. The Appraisal Institute has conducted studies that have shown a 5kW system adds $20k in value to a home. Zillow data shows that homes with solar sell for an average of 4.1% more. Also, if you remove them you will end up needing to replace the roof. So I’d leave them. 

    6Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Angie Shires thank you so much for the reply!

    0Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Steve K. thank you so much for the information. I didn’t expect so much detail this helps me out a ton! Greatly appreciated!

    1Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    6y

    @Richard Kelly I'd keep the solar for the savings. I think if you bulked up those columns and maybe added some railings across the front it would improve the appearance of the house by balancing out the roof a bit.

    1Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Jill F. thanks for the input! I definitely will be replacing the columns...I didn’t think about railings but I will consider. Thank you!

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    6y

    I think it looks fine. I sure wouldn't rip something off that can save or even make money for the buyer. There is lots of environmentally concerned buyers. I would work it into the theme of the house. Make sure all the interior light bulbs are LED. Look at things like window tinting to make it more energy efficient. Then market the property as an environmentally friendly home.

    2Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Joe Splitrock that’s and awesome idea! Thank you, I will do that!

    1Reply
  • Mindy JensenPro Member
    BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
    6y

    I wouldn't install them, but I also would not remove working panels.

    [email protected]Podcast Guest on Show #261
    BiggerPockets
    1Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Mindy Jensen thank you so much! I think I have come to the consensus to leave them on. 

    0Reply
  • Matt M.
    Specialist · Easton, PA · Member since 2018 · 1k+ posts · 2k+ votes
    6y

    @Richard Kelly

    Honestly, I think they are hideous looking and they make the house very unattractive and unappealing. I’d remove them.

    0Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Matt M. thank you for your input!

    0Reply
  • Matthew Fassett
    Rental Property Investor · Lehi, UT (Lehi) · Member since 2018 · 91 posts · 99 votes
    6y

    Some buyers will love them and geek out over the fact that their house has solar panels. Others will hate them and know the headache that comes with them. It’s all personal preference.

    1Reply
  • Account Closed
    Rental Property Investor · Twin Cities, MN · Member since 2019 · 122 posts · 150 votes
    6y

    @Richard Kelly

    Put a bunch in the front yard then nobody will notice.

    They look terrible.

    Dumpster.

    0Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Matthew Fassett I guess I will take the chance and keep them. Thanks for the input.

    0Reply
  • Sandra HabigerPro Member
    Accountant · Tacoma, WA · Member since 2019 · 50 posts · 9 votes
    6y

    @Richard Kelly

    I would love to own a house with solar panels! I agree that they don’t look very appealing, however, I wouldn’t remove them. In my mind, solar panels go well with a modern house. How can you modernize the look of the house without putting a lot of money into it? Maybe paint the bricks white or grey? I’m sure you can find ideas on Pinterest.

    0Reply
  • Daniel Lioz
    Houston, TX · Member since 2019 · 99 posts · 26 votes
    6y

    You can always pay $500 for electrical work and set up a Tesla connector in the garage and sell it as a free car charger for the life of a house :)

    1Reply
  • Josue Vargas
    Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
    6y

    @Richard 

    @Richard Kelly 

    Nice property regardless of the solar panels.  Most tenants looking in that market do not care much about curb appeal, they are looking for savings and a good deal, and the solar panels do just that.  It should be the selling point, plus you and them are doing something good for our future generation :)  Keep them! 

    1Reply
  • Josue Vargas
    Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
    6y

    @Richard Kelly 

    As I read your original post you said the house already have the solar panels and debating on taking them out or leave them, but there are posts misleading this information.  Could you clarify?  Is the property already with solar panels and system like shown in the picture? Can you elaborate on the system it has?  Capacity, solar panels brand and type, battery back-up if so, etc? 

    Thanks. 

    0Reply
  • Gabriel Askins
    Member since 2019 · 1 post · 1 vote
    6y

    The target demographic is the next generation as people in their 40's and 50s already have bought their residences. Gen X and beyond are environmentally friendly. They could care less about the effect on appeal but do care that they live in a space that is more sustainable and supports renewable energy. Bc it cuts out the power bill, you can actually charge more to rent the property. Those panels are catering to a specific group. They know that with those panels they won't be paying an average power bill of $100 a month. So build in those savings into the rent. I'd build in $50/month to the rent bc your property saves them twice that in utilities. Just my opinion.

    1Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Sandra Habiger thanks a million!

    0Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Daniel Lioz lol...not a bad idea!

    0Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Josue Vargas yes, the property currently has the solar panels...I purchased the prop via a Foreclosure sale so I don’t have much information on the type of panels, capacity etc. since so many people agree I should keep them I will be reaching out to a company to hopefully give me more info and see if they are even fully functional.

    0Reply
  • Richard Kelly
    OP
    Rental Property Investor · Metairie, LA · Member since 2015 · 30 posts · 5 votes
    6y

    @Gabriel Askins thanks for the input Gabriel. I plan on flipping this property but if for some reason my game plan switches to a BRRR I will consider your idea for rent.

    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    6y

    @Richard Kelly easy way to tell if they are functional: go to the property one day when the sun is out, look at the electric meter, watch it for a few minutes and see if it is spinning backwards! Or you can look at the inverter and see more info such as how many watts it’s producing, total kilowatt hours produced during its lifetime, etc. I don’t see why it wouldn’t be, those panels look pretty new and these systems are robust, no moving parts or anything that breaks. They should be making clean energy for many decades with little to zero maintenance. Whatever you do don’t trash it, that system would be worth about $15k new!

    0Reply
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