What do I do with solar in a rental property?

Question

I'm in the process of purchasing a long term rental as an investment property, which happens to have solar panels on the roof.

How should I go about and handle this? I'm considerting self managing the property, hope should I handle the electricity bill? Do I just let the tenant enjoy a lower bill?

Any special maintenance that it requires or something that I can use in negotiating the purchase or the rental agreement?

I was thinking of renting to Section 8 tenants if it matters.

Stephen Delahoussaye · Answer

Peleg, the lease language is where most new landlords with solar properties get tripped up. I manage rental properties in Nashville and have dealt with this on a few units.

The biggest thing nobody mentioned yet is your lease needs a solar addendum. It should cover who contacts the solar company for service issues, what happens if panels need repair and the tenant has to vacate temporarily, and whether the tenant can modify anything on the roof or near the inverter. Without that language you are exposed.

On the Section 8 side, Travis is right that lower utility costs help with affordability calculations. But check with your local housing authority about how they handle the utility allowance when solar is present. Some authorities have not updated their allowance schedules to account for solar savings, which means your tenant might get a higher utility allowance than they actually need. That can work in your favor or create confusion depending on the inspector.

For maintenance, solar panels need very little attention. Annual inspection of the inverter and cleaning the panels once or twice a year is standard. Budget about $150 to $200 per cleaning. The roof age point Travis raised is critical. If the roof needs replacement in the next ten years, factor in $3,000 to $5,000 for panel removal and reinstallation on top of the roofing cost.

Travis Main · Answer

Hey Peleg,

If you’re talking about a property with solar, I’d first figure out exactly how the system is structured before deciding how to handle utilities or tenants. The biggest thing is whether the solar is:

fully ownedfinancedleasedor tied to some kind of power purchase agreement

That changes everything.

If the tenant is paying the electric bill directly in their own name, then usually they just benefit from the lower utility costs naturally. A lot of landlords don’t try to separately charge extra for the solar savings unless utilities are included in rent.

What I would do though is make sure you fully understand:

whether there are any remaining solar paymentswarranty transferabilityroof age under the panelsinsurance implicationsand whether the system actually offsets enough usage to matter.

One thing people overlook is that if the roof eventually needs replacement, solar panel removal/reinstallation can add a pretty decent expense.

As far as negotiations, I’d definitely ask for:

copies of electric billssolar production reportsloan/lease documents if applicableand maintenance history

For Section 8 specifically, lower utility costs can actually help because utility expenses affect affordability calculations and tenant demand. I’d just make sure everything is documented clearly in the lease regarding:

who pays utilitiesutility transfer requirementsand any responsibilities related to the solar system itself

If the numbers work even without heavily relying on the solar savings, then it’s probably a much safer deal overall.

Jim Johnson · Answer

Hi Peleg!

Personally, I’d first figure out whether the solar system is owned outright, financed, or leased — that changes almost everything operationally and financially.

If it’s owned, most landlords just let the tenant benefit from the lower electric bill and use it as part of the property’s value proposition. If it’s leased or financed, then you’ll want to understand:• Who’s responsible for the payments• Whether the agreement transfers with the sale• Any restrictions tied to the system

From a management standpoint, solar itself is usually pretty low maintenance, but I’d still want documentation on warranties, monitoring access, installer info, and roof condition.

For negotiations, I’d definitely factor the system into due diligence rather than assuming it’s automatically a benefit. Some setups add value, others add complexity.

If you end up renting to Section 8 tenants, lower utility costs can absolutely make the property more attractive and help affordability on the tenant side as well.

G. Brian Davis · Answer

First, check if the solar panels are owned, leased, or under a PPA. If you own them, you can pass savings to the tenant or include utilities in rent. With Section 8, utility costs can affect vouchers, so check local rules. Maintenance is usually minimal, mostly cleaning panels and inspecting the inverter periodically. Solar can also be a small negotiating point on purchase price or rent.

Ryan Thomson · Answer

First thing to figure out: is the solar owned outright or is there a lease/PPA attached to it? That changes everything.

If you own the panels free and clear, you've got options. Easiest setup is to keep the electric bill in your name, pay it yourself, and raise rent by a flat amount that reflects the average monthly savings. Tenants get a simpler lease, you capture the value of the system, and you're not playing games with net metering credits hitting someone else's account. In Colorado Springs, owned solar can shave $80-150/month off electric bills depending on system size. I've seen landlords raise rent $100-125/month on top of market rate and still get multiple applications because the math is obvious to anyone paying $200+ for electricity.

If there's a lease or PPA attached, it gets messier. The contract has to transfer to the new tenant or you absorb the payment yourself. Most leases run 20-25 years with escalator clauses. You'll want to read what the transfer process looks like, because some solar companies drag their feet on paperwork and it can delay move-ins.

One thing people overlook: if you ever sell the property, a leased system with 15 years left can complicate your buyer's financing. Lenders treat it differently than an owned system. Worth knowing now so it doesn't bite you later.

What type of agreement do you have on the system?

What do I do with solar in a rental property?

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