Increase monthly cash via solar power?

General Landlording & Rental Properties
12yFollow

Increase monthly cash via solar power?

Ronald PerichPro Member
Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes

I have been listening to the podcasts with regularity - they are great for a person on the go! One area that interests me is the idea of more cash flow by bringing in other sources of income.

I'm wondering about the use of solar panels to help increase cash flow. 

Let's assume the cost is $30K. I tie that back to the grid and recover my costs in seven years (national average). For the next 20 years or so, I'm booking $400 a month on that device. And I also get to depreciate the investment, so it's saving me about $250 a year in taxes.

Has anyone done this or considered doing this? What are your thoughts or experiences?

3Reply
121 views

Most Popular Reply

Joshua D.
Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
12y

I love this idea! 

However I would wonder about long term repairs on a solar system. Would you end up with $200 a month in repairs at year ten?  I have several friends in this area that are shelling out big bucks for these fancy units to power their own houses off the grid, but they are all relatively new. (Bought in the last year or so). I just wish we had more info about them.  That's the nice thing about rental housing is we have a great history of people telling us you can expect 50% expenses over the long hull.  But what is solar 20%? 80%?   How do you know?  

However, tying to the grid and having the local power company fund you sounds much better than powering a personal house...(no battery's involved)  are you sure they will allow this?  I just assumed that my area will not because I live in a rural area of Montana, but I better call and make sure.  

Thanks for the inspiration!   Good luck 

Geocode:20-4030-12-3-20-08-0000Assessment Code:1090383000

 and having the money come from the 

1Reply
See this reply in the discussion

26 Replies

Jump to latestLatest
  • Joshua D.
    Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
    12y

    I love this idea! 

    However I would wonder about long term repairs on a solar system. Would you end up with $200 a month in repairs at year ten?  I have several friends in this area that are shelling out big bucks for these fancy units to power their own houses off the grid, but they are all relatively new. (Bought in the last year or so). I just wish we had more info about them.  That's the nice thing about rental housing is we have a great history of people telling us you can expect 50% expenses over the long hull.  But what is solar 20%? 80%?   How do you know?  

    However, tying to the grid and having the local power company fund you sounds much better than powering a personal house...(no battery's involved)  are you sure they will allow this?  I just assumed that my area will not because I live in a rural area of Montana, but I better call and make sure.  

    Thanks for the inspiration!   Good luck 

    Geocode:20-4030-12-3-20-08-0000Assessment Code:1090383000

     and having the money come from the 

    1Reply
  • Ronald PerichPro Member
    OP
    Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
    12y

    @Joshua D. I looked at a couple of different sites on this and think that the sustainment costs for the device is going to be about 30% of the original purchase price. From what I have read, almost every community allows for the system to be tied into the grid.

    If you can't tie to the grid, couldn't we follow a plan (sub-metering) similar to that mentioned in http://www.biggerpockets.com/renewsblog/2009/07/25...?

    For the sake of full disclosure, I believe systems tied into the grid are automatically cut off if power goes off in the area. It's a safety feature.

    0Reply
  • Ryan VanPatten
    Investor · Herndon, VA · Member since 2013 · 56 posts · 7 votes
    12y

    @Ronald Perich 

    I have been wondering myself if this is feasible.  I had a similar idea on a commercial basis as well, but never really researched anything.

    Does anyone else have any experience creating cash flow with solar panels?  Either tied or not tied to the grid.

    Thanks

    0Reply
  • Ryan VanPatten
    Investor · Herndon, VA · Member since 2013 · 56 posts · 7 votes
    12y

    I did read another posting that mentioned to have carports installed with solar panels on top.  This way you can charge more for having a carport parking spot, and the solar can also pay for common area electicity. 

    0Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    12y

    There have been a couple companies here in KC that can (or at least say they can) take advantage of government subsidies to make the cost really cheap. I'm not a big fan of government subsidies, but it's hard to not take advantage of them when everyone else is. I would look into that in your area, I think the grants were federal so there very well are some tax credits you can take advantage of for adding solar.

    Podcast Guest on Show #121
    1Reply
  • Joshua Springer
    Residential Real Estate Agent · Columbus, OH · Member since 2013 · 281 posts · 110 votes
    12y

    Some HoA's and communities have rules against them just because of the cosmetic issue...if this doesn't effect you then it would be interesting research nonetheless.  I mean at 30k you could buy another property and would get a better return most likely...unless power prices go up considerably.

    0Reply
  • Ronald PerichPro Member
    OP
    Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
    12y

    I think it really depends on what packages you can get and how the deal is structured. A lot of incnetives still exist in certain areas to use the power of alternative energy sources; many of them low-to-no cost. Anyway, it's something to think about. I'd love to hear if anyone has done it!

    0Reply
  • Jay C.
    Seattle, WA · Member since 2014 · 307 posts · 170 votes
    12y

    I do not see it as a viable investment. I am reading more and more grids are charging solar customers where they are on the grid or not. They state they have capitol costs of the system and just because you voluntary decide not to connect is not a reason not to pay. I look for more cities and counties to adopt this rule in the future.

    1Reply
  • Cody Kauzlarich
    Des Moines, IA · Member since 2015 · 45 posts · 28 votes
    11y

    @Ronald Perich

     I was reading in a different post where you had cited this thread from last year but I am curious if you have anything further to follow up from this.

    I am interested in adding solar to a duplex rental that I own. Currently each tenant pays about $85/mo with budget billing. If I add solar I would take over their electricity payment and increase their rent by probably $100/mo. My intention would be to have a system large enough to sell back at least a small amount of electricity and then be collecting the additional rent. I feel that a "green" residence and the ease of making the one payment each month would offset the extra $15 or so a month for the tenant and I would make even more money over just not paying an electric bill. 

    There may be a better way to go about this but it is something that I am very interested in. 

    0Reply
  • Tanya F.
    Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
    11y

    @Cody Kauzlarich

    We have done this on a 1914 house. We've also improved insulation, upgraded furnaces, and provided garden space for our tenants. We're marketing the green apartment and finding green-minded tenants. They care, we care, good relationship, good return on investment.

    We haven't upgraded windows yet, but we will begin that in the next year or two.

    0Reply
  • Jennifer T.Pro Member
    Investor · New Orleans, LA · Member since 2014 · 1k+ posts · 944 votes
    11y

    I have solar panels on my duplex (live on one side, rent the other).  It is separate meters, so the solar panels are only tied to my side.  I actually "lease" mine.  I signed away my rebate benefit to the solar company in exchange for having them put on my house for only $35/month, no down payment.  The $35/month contract is for 20 years, though I can end the contract after 6 years.

    For the number of panels that come with the government rebate, they do NOT fully provide me with all my electricity needs.  I still have an electric bill every month, but it is cut down by about 50% most of the year and 60-70% in the summer.

    Generally speaking, during daytime hours, I am supplying my own electricity PLUS "selling back" electricity to the grid.  Those "extra/sold" KwH are then subtracted from my total KwH used on my bill.  

    0Reply
  • Ronald PerichPro Member
    OP
    Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
    11y

    @Cody KauzlarichSorry, I haven't anything further at this time... interesting concept you are considering!

    0Reply
  • Ed Neuhaus
    Real Estate Broker · Austin, TX · Member since 2014 · 97 posts · 26 votes
    11y

    I have been thinking about this as well. In Austin you can get about 6kw installed for 7-8k out of pocket.  From what the solar installers tell me, that will offset about $100-130 in electrical bills a month. This varies by area.

    My idea was to just install a smaller system, say 2-3kw at a cost of about 4k.  Then use that to get a rent increase of 100-150/month and let the tenant pay the rest of the electricity.  That to me has the fastest pay back. 

    0Reply
  • Cody Kauzlarich
    Des Moines, IA · Member since 2015 · 45 posts · 28 votes
    11y

    In my picture perfect scenario I would install a large enough system on the duplex to possibly make a small amount of money through the summer in addition to the rent increase. Rather than replacing the electricity bill with the cost of the system, I would increase the rent slightly more than what the current budget billing is to recoup costs and then hopefully sell an amount back to the energy company(in a perfect scenario). 

    I think it is something to look into, but I will most likely wait until I'm between tenants.

    0Reply
  • Ed Neuhaus
    Real Estate Broker · Austin, TX · Member since 2014 · 97 posts · 26 votes
    11y

    Check out this story about solar. 

    http://mashable.com/2015/08/20/google-house-solar/...

    1Reply
  • Account Closed
    PA · Member since 2010 · 339 posts · 168 votes
    11y
    My take on solar panels is that the manufacturers and installers make money but consumers will ultimately not benefit. The salespeople present numbers that are dependent on subsidies,which are likely to not continue for very long, so the projected 10 year break even point they proposed to me will likely extend further out. One of the main selling point is the lifetime warranty, but most likely these companies will not be in business for more than a few years. The biggest concern is that the technology is changing quickly (e.g. Google "perovskites"), so cheaper and more efficient panels will replace the current silica panels. While I am a big fan of sustainable energy, the solar panel market does not favor consumers.
    0Reply
  • Ronald PerichPro Member
    OP
    Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
    11y

    @Cody KauzlarichI have a unique situation facing me. I'm getting ready to close on nine units. Two fourplexes across the street from each other. On one of the fourplexes, there is an attached studio apartment (they converted a two-car garage). I'm going to call a couple of colleagues from my electric vehicle club and who also put up solar to get some of their people to come and look at my property. 

    My thinking is if I can connect the solar panels across the street and run it all through the studio's electric meter, I can probably feedback a lot of power to the grid. And offer the resident of the studio free electricity (while charging a little more for the anticipated rent).

    0Reply
  • Tanya F.
    Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
    11y
    Originally posted by @Ronald Perich:

    @Cody KauzlarichI have a unique situation facing me. I'm getting ready to close on nine units. Two fourplexes across the street from each other. On one of the fourplexes, there is an attached studio apartment (they converted a two-car garage). I'm going to call a couple of colleagues from my electric vehicle club and who also put up solar to get some of their people to come and look at my property. 

    My thinking is if I can connect the solar panels across the street and run it all through the studio's electric meter, I can probably feedback a lot of power to the grid. And offer the resident of the studio free electricity (while charging a little more for the anticipated rent).

     Check with your utility.  If you have your system sized so that you produce on average a little less than you use (over the year your average bill is positive) then you get reimbursed at the high rate.  

    If you always produce more than you use in our city, the utility credits the energy we feed into the grid at really low rates.

    0Reply
  • Mosun Mah
    Investor · Los Angeles, CA · Member since 2014 · 25 posts · 9 votes
    11y

    FOR THOSE LIVING IN SOUTHERN CALIFORNIA...HERE'S A LINK TO A SOLAR MAPPING TOOL

    http://solarmap.lacounty.gov/

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    11y

    An issue to consider too @Ronald Perich is whether you lease or buy the panels....as well as will the panels become an issue when you go to sell the property. Below is a good article from the Washington Post about the potential problems that can pop up when trying to sell a home with solar panels.  Ive personally never been involved with a transaction involving a home with solar panels....but I did once have a client tell me on a house we looked at, that they were not interested in the house due to the aesthetics of the panels.

    http://www.washingtonpost.com/realestate/why-leased-solar-panels-may-not-be-an-asset-when-a-house-is-up-for-sale/2015/03/18/41392e26-cc0b-11e4-a2a7-9517a3a70506_story.html

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    0Reply
  • Jay Carson
    Broker · Spokane, WA · Member since 2015 · 6 posts · 1 vote
    11y

    @ Seth Fulton

    We were just talking about this.  Interesting points to consider with your current project

    0Reply
  • Ronald PerichPro Member
    OP
    Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
    11y

    @Russell BrazilI spoke with a solar company today and they cannot do as I propose. I would need to be responsible for all of the meters and I am just not interested in adding to the complexity needed to make this happen.

    Also, Illinois Net Metering does not "pay: you for extra energy generated, they give you credit toward future usage. And the credits expire.

    So there won't be any solar on the property. That's a shame. I was really hoping to find an additional source of income, not to mention doing something good for the environment.

    As far as aesthetics go, had this been a money making venture, I'm sure the future buyer wouldn't mind. A multifamily with built in streams of multiple income is never a bad thing, is it?

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    11y

    @Ronald Perich If it is 4 units or less, the income generated is not the primary driving factor of the value of the home. Now if it is 5 or more units, meaning a commercial property then the extra income should help to drive the value of the property.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    0Reply
  • Andrew Sparks
    New to Real Estate · New Bedford, MA · Member since 2014 · 15 posts · 8 votes
    11y

    @Ronald Perich thanks for checking back in with the info you found. Although it isn't viable for your situation I really like the idea of thinking outside the box in terms of diversifying incomes from a property.

    1Reply
  • Ronald PerichPro Member
    OP
    Investor · Granite City, IL · Member since 2014 · 658 posts · 301 votes
    11y

    @Russell BrazilThese are two fourplexes, one of which has an attached studio (making it five). I realize the comps are property-driven for the fourplex, but I'm not buying anything based on comps for buy-and-hold and most of the investors I know in the area don't as well.

    If I were able to bring in an extra $8K a year under this plan, I know that would bring me an additional $60-80K at sales time. Just wished it would have worked out.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free