Should I put solar panels on my future SFR

Question

I've got a single family home that my wife and I are living in while rehabbing. We're moving out of state in about a year and were recently pitched the idea for solar panels on the house. We're in the panhandle of Florida with a good south facing roof. The payment plans basically cut out $40/month from our electric bill, but that's with just my wife and I living in a 4 bedroom home.

Questions being, what do you all think about putting the panels on? The payment plan is over 25 years which is a lot to swallow. And I'm wondering if it will be worth it in the long term to rent it out and basically provide my tenants with about a $150/month electric stipend, but I would then have to add that into the rent.

Thoughts??

Jake Ferguson · Answer

@Andrew Smith

Thanks for the reply. The addendum is definitely a good way to go if I choose to go with it!

Logan Boesch · Answer

@Jake Ferguson Where in the panhandle are you at? Who's your utility provider? We service the entire panhandle of Florida for solar and there are only certain utilities that would make solar worth the investment currently. We've installed a ton of these on short and long term rentals here in the panhandle with great ROIs. If you plan on doing this on a long term rental I would recommend coming up with a fixed cost for what you want to charge the tenant for electricity and bill it as a separate line item to not price yourself out of the market. (A side note: one thing a lot of landlords don't think about is how hard it can be for a tenant to swallow a $300+ electric bill in the heat of summer when the AC Doesn't turn off. Flattening that out to a fixed payment has gotten great feedback from tenants.) Then you can either transfer the remaining utility bill over to the new tenants so they pay any overage above the fixed cost (easiest) or charge the tenant an overage to compensate for any difference (makes more money but a little more work).Let me know if you have any other questions or concerns.

Logan Boesch

Freedom Solar Energy

David Paul Westenberger · Answer

my rule of thumb: if more than 50% of the homes in the neighborhood have solor panels then ill think about getting them. if not no way not worth the return.

Andrew Smith · Answer

I posted this on another thread about solar on rentals. As you said there are pros and cons. ROI is very good in FL compared to other States  - especially as tenants are paying for the system effectively:"It depends. Is this a SFR or multi-unit? Are the tenants paying the utility directly? Do you live in the property too? There are pros and cons for a rental property with regard to solar. First, other people will be paying for an asset to the building that raises the value of the property. In some areas this is not the case but certainly does in CA (and FL).

There is a little complexity in how the tenants pay. You can add to the rent and offer "free" electricity or you can bill them for their usage from the system at up to the same rate as the utility. You have to track that usage, and their is admin involved in that so that would be a negative for most landlords.

The "free" power with increased rent has 2 caveats. First you'd have to add a lease addendum for existing tenants to outline the increased rent in exchange for power. The addendum would also either need to ensure the tenants still took responsibility for any excess power used either by paying the utility for that directly or by paying you if you bill for that.

Bottom line it's attractive to have others pay for an asset that improves home value. Tax credits exist now - they will disappear especially as solar is now mandated in CA. The mandatory solar applies to significant remodels, so at some point you will have no choice but go solar - in the future there will be fewer if any incentives to do so. The down sides are that it will require some admin one way or another - either by lease addendum and/or beginning to bill the tenants directly.

As far as the 50% rule - well that would mean zero homeowners would go solar! The only neighborhoods with those stats right now would be brand new developments, especially in CA where solar is mandatory. FL has around 1% adoption of solar right now, largely because the state wasn't effectively open for solar business until mid-2017. Whether a neigbor has or doesn't have solar doesn't mean your home will ROI with solar. All usages and available roof space vary, as does property orientation.