Solar Panels

23 Replies

Hi all I have a question about solar panels. Do they add value to your home. Also if a lot of houses in my area are starting to convert to solar would it be a smart move to jump on the band wagon. Thanks I appreciate your input.   

I'd love to have some appraisers chime in on this one because no one in our area seems to know how to evaluate homes with solar panels. I have them on my house and save about $200 per month in electric.

My thoughts are, if your house is valued at $500,000 then the same house with solar panels saving $200 a month in electric should bring the value of your panels to $541,900. 

With the current interest rate of 4%, $41,900 comes to $200.04 a month that you can put towards the mortgage. Since the house with solar panels is saving money that you could put toward your mortgage (or whatever else), that's clearly added value. Maybe that's odd math/words to explain my thoughts, though.

If many houses in your area have solar panels, especially with trends towards sustainability, then it's certainly something you should consider.

Thank you considering them were my thoughts exactly thanks again

Does anyone here have solar panels on a rental? Did you buy or get them through a lease agreement with the installer? How does that work with your tenants?
Originally posted by @Max T. :
Does anyone here have solar panels on a rental?

Did you buy or get them through a lease agreement with the installer?

How does that work with your tenants?

Yes, we do. We own them.

Here's a thread where I described what we do

I would think Rentas would be happy to have solar panels.they reduce their electric bill but it is an eyesore and what happens when you need a new roof. there are a lot of pros and cons you just have to weigh them all out I guess.

A couple of things.

I wouldn't put them on unless you had a very new roof. 

Our power company requires the electric bill to be in our name if we have solar on the roof, not the tenants. So we now include the electricity in the rent.

We make the house energy efficient and attract green-minded tenants. So far they've all been excellent tenants.

I don't see cons. I don't agree they are an eyesore at all. But that's subjective. Run the numbers and see if they work for you.

Thanks Tanya I'm on the same page as you. I just wanted someone else's thoughts

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@John S.

Also keep in mind the advantageous energy credit - 30% of qualifying expenses reduces your tax liability dollar-for-dollar. It makes solar panels that much more enticing! 

@Tanya F. Thanks for sharing.  I'm very interested in energy efficient and green homes.  

@Brandon Hall Good to point out.  

I just started in the home energy efficiency field and I'm interested in how it can create value for rentals.

Our local REIA had a panel of appraisers come in for a group discussion. Solar power did come up, and here is what they explained. The values are based on your property compared to the others on the neighborhood. Neighborhood average compared to your house. If your property is the only one with solar in the comparable range, it will not have much of an affect on the price. It is seen like a luxury add-on (like a pool). If a majority of the area had it and you didn't the appraisal would be affected more than if you were the first on the block to have it. If you were putting it on a flip, you would not recoup the cost of installing it. The cost recovery comes from your use of it.

I don't understand why anyone would think a house with Solar would gain no value over a house without Solar.  That is like saying that 2 cars that are exactly equal to one another, except that one car gets 100 mpg and one gets 20 mpg, are worth the same.  I'm pretty sure I would pay a premium to get the 100 mpg car.

I think comparing it to a pool is nonsense.  A pool is not a necessity, most would say that electricity is.  A pool costs you money to own, Solar saves you money.  Talk about a basic logic error.

IMO, solar is not an eyesore at all, I think it actually improves the look of a house.  I'm a little biased of course because I have solar that I paid cash for, however, I researched all the financial implications before purchasing.  A few minutes of research will provide you with plenty of data showing how Solar increases the value of your house and actually helps it to sell faster compared to non solar houses.  Here are some links to a few studies, I could link many more:

This last one shows how appraisers just don't get the current reality of Solar:

I have not run the numbers if installing Solar on a rental would be beneficial.  I plan to eventually turn my current house into a rental and I'll charge a premium in rent due to no electric bill.  It would maybe take slightly longer to pay the system off with a lower return on a rental, but it wouldn't be a money loser imo.  I get 15%+ return on my solar.

So I am looking for a new place to live.  Rent or buy, either way.  My monthly budget is XXX.  I want to get the best place for my budget.  What is it I'm looking for?  

Location, Size, Condition...   Unless I am specifically looking for solar panels either to be green or save money on utilities then it doesn't add value.  

In other words I wouldn't pay extra for it.  It's a nice gee whiz, but I think most people aren't specifically looking for  a place with solar panel.

Well, the solar panels do protect your roof, lol! I had a panel taken out by the last big hailstorm, but the underlying roof was fine. And since I have what is basically a lease arrangement (technically, a power purchase agreement) with SolarCity, they took care of the repair/replacement. I am locked into a low rate for my electric now, so that should become increasingly valuable over time, assuming electric rates from the public utility increase. 

 Believe it or not but there is a percentage of our population that actually cares about being green and are willing to pay a premium for it, and this percentage is growing every day.  However, solar makes sense based on financials alone in a lot of areas.  It seems that people have a hard time wrapping their had around the reduced costs?  For my home, electricity would cost around $300 a month average.  If your budget is 2k a month for rent/utilities, you can't discount the cost of the utilities on a non solar house.   Therefore, solar house rents for 2k, non solar house rents for 1700 + 300 in electric bills.  Yes, many people would choose the solar house in this situation. How does this benefit the owner of a house with solar?  After 6-7 years in my case, the solar system is paid off and now that $300 is going straight into my pocket. Panels are guaranteed to be producing 80-85% at year 25 as well.  When I'm looking around at future personal residences I factor in the difference of what my current home costs me with solar vs a new one without solar.  Basic Math  These returns are not even factoring in the $100-$200 a month i'm now saving in gas by driving an EV for free.
Originally posted by @Brandon Hall :

@John S.

Also keep in mind the advantageous energy credit - 30% of qualifying expenses reduces your tax liability dollar-for-dollar. It makes solar panels that much more enticing! 

 Last I recall, this was for owner occupied houses only, yes?  Rentals don't usually qualify for the credit.

@Linda Weygant

Yes, energy credit is only available for owner occupied though it wasn't clear whether this was owner occupied or a rental. Good to point out to the crowd though. Thanks Linda!

Yes this is my own personal home. I think I'm going to do it.

Even if they don't "add value" they're still most likely worth it for a primary residence, especially if you plan on staying. 

As far as adding them to rentals, having solar might not matter to renters in lower-income areas, but I'd also suspect that higher-income, higher-educated tenants might pay a slight premium to live in a more environmentally-friendly building, or that building would simply be more desirable to tenants. It's mostly a demographic question at this point, with the trend leaning towards solar being standard in the next few decades, at which point that premium would disappear.

Michael yes install is free every is free you just pay them 120 dollars a month and 20 dollars to the electricity company. Unless you use their electric them you pay for what you have used

@John S.

Free? You don't have to pay for the panels? I thought it would be expensive. Hmm.

Promotional reasons that's why I was considering them no out of pocket expences

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