We are looking at purchasing a home built 2016 in TurnKey condition. It has a new roof new water heater completely renovated. However my concern is the solar panels they are least so you never going to own them outright. And every month you have to pay a leasing fee. What are some things I need to be concerned about regarding the solar panels?
They are leased solar panels? Who owns them: the municipality, electric company, solar company? Regardless, I'm willing to bet there is a clause in the lease that allows the new homeowner to remove them if the house is sold. The lease shouldn't be transferred to you if you didn't enter the contract.
That then begs the question of who pays for the removal of the solar panels. It should be either the current homeowner (seller) or the solar/electric company they are leasing through. If the responsibility falls on you, I'd just ask for a credit from the seller.
All that being said, maybe the savings on the electric bill offsets the lease and lowers expenses for you! Do some research on it but if it's saving you money I say just roll with it and save the environment on your way :)
A couple of things to know about leasing solar panels:
"Here are the main reasons why a solar lease is a bad choice for most people: Solar leases and PPAs usually have an escalator clause that raises the cost of your electricity by a fixed amount every year. You could end up paying more for electricity than if you didn't go solar at all." (Source:https://www.thesolarnerd.com/b...)
And: "What happens at the end of the contract? At the end of your initial lease term, your options may include renewing the solar lease contract for one to ten years, upgrading to a newer solar panel system and signing a new contract, or removing the system." (Source: https://modernize.com/solar/le...)
Also, some mortgage lenders won't finance with lease agreements in place. You should also know that roofers will not remove or reinstall panels should a repair or replacement of the roof be needed.
Before you decide anything, you need to see the lease agreement. An escalation clause would be a deal breaker for me; then the lender would need to be consulted. I do know in my market - the sunshine state to be precise - it is HARDER to sell a house with solar panels on it than not. Amazing...
@Patricia Steiner great insight! This is really helpful.
I don’t buy investment properties with solar. I really wish they were cost effective for investors, but they are not. They are a feel good idea, that is not fiscally prudent.
When they are, I will be first in line, but they are not.
Check your numbers, they just don’t work.
I ran in to that in an area I was looking to 1031 exchange into. So many had these leases. If I was really interested in the house at first I got a hold of the contract from the seller agent. The 3 I looked at were not worth getting into. I just dropped the idea of getting any with solar panels. It wasn't worth it for me. What I looked at in the end is that all benefits really transferred to the tenant but adding that fee into the rents just took the rents out of range as well.
@Kenton LeVay So the solar panels are owned by solar city which was bought out by tesla. The current homeowners mentioned the buy out fee is $55,000 and they do not have the money to have them removed. With that being said the panels are contracted to the home and not the home owners. The current owners said we could call and have them removed. Yes they do save money however, since there on a lease the money you save on electricity is being paid towards the leasing fee. I do feel like the current homeowners are trying to recoup their costs through the sale of the home. So how would I go about asking for a portion of the purchase price back to have the panels removed? My husband is an electrician for a solar company so having them removed is no issue. With my husband's company the homeowner purchases the panels so they actully save money. I do not want the solar company to place a lien on the home for that cost that is my fear. I am going to contact the solar company prior to the closing of the home to see how it will all work out. If need be it might be a deal breaker. The home would cash flow $3800 through section 8 which is the direction I want to rent.
@Patricia Steiner thank you for that great advice. I never thought about that. Am I in my legal right to ask to read that contract?
@Sally Fairchild thank you for your advice. I appericiate it.
@Nicole W. Thank you for your advice. I'm going to ask my agent to get a copy of the lease agreement so I can read it.
Of course...yes! It's part of the inspection of the property. You can also condition the purchase to the removal of the solar panels prior to closing and not assume the lease or even renegotiate the lease directly with the company. My recommendation is to not assume any existing lease until it is deemed acceptable to you by review of the contract and consultation with the lessor.
A huge no. There is a reason solar hasn’t caught on. Not worth it.
If you buy and remove them, then you have all these holes in your shingles. A new roof you no longer have.
@Matt M. That is so true Matt. My husband is an electrician for a different solar company so I know he can fix the holes. However, like you said it is no longer a new roof. Will that effect the value if or when we decide to resell the property if it hasn't been longer than the roofs life? Everyone is giving great advice so I might pass on this home.
I would imagine when you go to sell, and the buyers home inspector sees 150 siliconed holes.. it may not work in your favor
Do not buy the home until the solar panels are removed and the roof is repaired. It's as simple as that.
@Matt M. Well said! I think I'm going to pass. There will be other properties.
@Tanya F. Let me find out. I still haven't seen the contract for the property.
@Craig Janet when you say repaired do you mean with new shingles?
I'm not too familiar with solar panel installation, but I assume they are bolted down with at least some 1/4 lag bolts maybe larger. So yes new shingles would have to be installed. Caulking would be a leak waiting to happen.
$55k is high. I had a homeowner tell me his paid for system cost $25k.
Iirc the house was north of 3000 SF, and the system was tied into the electric company grid.
I don't know that the numbers work better for buying it outright,
but I am not a fan of leasing equipment long term.
I bet it's $5500. That's much more like it for a moderate sized system, especially if they're several years into the lease.
Heck yes I would buy a house with solar panels; but only if I own them and I know the age of the roof/condition underneath them. In fact anytime I have a property with a metal roof I put solar on because the pay off is about 10years but it increases resale value and I can charge tenants extra for the environmental good they feel.
That's a great question, I would consider it I would just ask the owner for all the paperwork and payments to be up to date. I wholesale and flip and have came across properties that have liens for solar panel companies because owners default on payments. You can also compare bills with and withouth solar panels if able to, so it can be a good thing if your keeping for a rental or home!
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