How do Investors look at Solar

Question

Hey guys I recently started a solar company here in Phx. I have rental properties and am flipping as well. I know solar for rentals doesnt make a whole lot of sense but i am curious  how investors feel about solar panels on commercial properties? Storage facilties, land, commercial space, etc. Can you write it off as a deduction? Has anyone done it and be able to provide feedback?

Will Barnard · Answer

It depends on the asset and the strategy. If your asset is owner paid electrical and it is an apartment in an area like SO Cal or AZ where sun is year round, then it makes a lot of sense. If tenants pay utilities, it makes little financial sense unless you can get higher rents for that privilege to your tenants that offset the cost and the net result to you is cash positive (or equity positive).

On other commercial assets where electricity is paid by owners (like self storage as an example), then you need to look at costs vs savings and see where your return comes out. It is all about the numbers and these hell no or absolutely answers are not really the correct answer as one size does not fit all! Solar has come a long way now, especially with generator and battery back up systems.

Greg M. · Answer

Two areas I'd look into:

1) Install solar on top these buildings and sell offset credits to companies.

2) Leasing the roof to companies that want to install solar. You collect monthly rent.

Joe Splitrock · Answer

@Kevin Kramer large companies are investing heavily in solar at their commercial facilities. This is part of a larger sustainability investment companies are making. They do it partially for cost savings, but also as part of their environmental impact statement. Companies are looking to be net zero for energy and carbon. There are some tangible benefits like Green Building Tax Credit programs. The cost of solar can be a tax deduction, probably even qualifying for accelerated depreciation. The benefit to the landlord is attracting higher rents from their tenants or using it to market their space as environmentally friendly. Also be aware when reading responses, that solar adoption varies by state. Weather plays a big role, because solar requires sunlight. Solar can also become a political debate, because it enters into the discussions around carbon emissions and climate change. Some states have mandates or subsidies, that incentivize adoption.

Bud Gaffney · Answer

I think its a waste.

Scott Mac · Answer

Pass..Hard pass.

Nathan Gesner · Answer

I don't know about anyone else, but I typically eye solar with a cautious eye and a hand on my wallet.

Michael Noto · Answer

You have gotten good advice on this thread. If you run the numbers it only makes sense if there is owner paid electric in a bigger apartment building that someone is holding long term.

Angel Dejesus · Answer

@Kevin Kramer

Solar is a great investment. After this green new deal the return on solar CREDITS have gone up 💯.

Also take in consideration if you pay out right your applying for a loan that you pay interest that’s tax deductible.

Also if your in Multifamily investing 1 building with solar you can use that one building to offset other assets you have that you pay utilities.

Let’s just say solar pays for itself. Or pays you back to pay fir the solar. If that makes sense. It’s like having a cash back credit card.

I think there’s many advantages. Hope that helps.

P.s start thinking Carbon Credits. Green new deal.

Andy Nathan · Answer

@Kevin Kramer I just reached out to my congresswoman because the solar laws make no sense for section 8 landlords. There is huge potential wins for landlords, tenants, and the environment if we update the laws.

By my calculations, it would be possible to increase the amount of money collected by over $1.1 million (net before taxes) per every 100 properties over 20 years (typical lifetime of solar panels). Not saying it is a great immediate return but could be great for landlords looking to get more out of their current properties.

Alexander Felice · Answer

for single family rentals it doesn't command a price premium from the renter but does cost a significant price premium to install. Makes for a net loss to the investor, which is sort of the opposite of the point to investing.

It makes much more sense on properties where owners pays utilities and plans to hold for a long time, but even then it's not yet an obvious choice. It's also very market specific, far more appealing in the southwest.

Over time costs will come down and it'll become more and more viable, not sure we are there yet.

How do Investors look at Solar

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