Real Estate Investor · Columbia, MD · Member since 2014 · 172 posts · 94 votes
I am having Solar City come out next week to assess whether my primary home and 2 rentals are good candidates for solar panels. Their schtick is that they pay for the system (so no out of pocket to me), and I pay lower utility bills. They would also pay all repairs, if needed, and cover the insurance cost for theft/vandalism. The panels are also guaranteed for life. If this is in fact true, then I would pay a lower bill each month for my electricity in my own home and my tenants would also in the rentals which is a great selling point when wanting to rent out the places. I also would get warm fuzzies knowing that I'm doing my part to help the environment, which is important to me.
So, my question is: Has anyone worked with Solar City? Do you foresee any problems arising with putting panels on rentals? Is there something that I'm missing here because it sounds like a no-brainer to get them installed?
Rental Property Investor · Sacramento, CA · Member since 2011 · 2k+ posts · 1k+ votes
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@Sandra Holt it wasn't directly with Solar City but with Elon's panels. I was the construction manager for the Alcatraz Island solar generation conversion. We use over 900 of the panels. Or similar panels.
Littleton, CO · Member since 2014 · 39 posts · 5 votes
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If you are going to have Solar City install panels on your roof they have two different options- The purchase option or the lease option. From what you were describing it sounds like the lease option. This is a 20 year transferrable lease from SolarCity that I believe covers any needed repairs and removal as well. In some areas the energy company will buy back unused energy from you as well. Typically you would have to sign a contract with the energy company. Here in Denver it was a 20 year transferrable contract, I don't recall all the details.
As for Elon Musk, he is one of my hero's. How many other entrepreneurs do you know that have started this many revolutionary products for the masses. Not just started but have successfully pioneered each one. Tesla, Paypal, SolarCity! The energy companies and automotive industry are not ones that like new competitors either. Plus he seems like a super nice down to earth guy.
Real Estate Agent · Erie, CO · Member since 2014 · 1k+ posts · 512 votes
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Just as an extra note. You do get similar coverage when you purchase the panels and you'll get the federal rebate. The company will still warranty them and take care of maintenance for 30 years. I looked into it for my personal residence and it was close to my current electric bill. They also charge $500 to remove the panels and install them on a different house. There may be some hidden costs in there, but the lease isn't always the best option. Most folks seem to think that the purchase isn't feasible, but why lease panels for that long only to own nothing. Plus you have to get the new owner of the house to agree to the lease if you sell. Figure if after 30 years you lose 20% output due to deterioration. That is still plenty of power and it will technically be free. Plus you can move the panels around to whatever house you want. Just my 2 cents.
Real Estate Agent · Erie, CO · Member since 2014 · 1k+ posts · 512 votes
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That seems like a gray area in legality. Isn't it illegal to profit from utilities? I guess the only way to do it is the tenants pay a flat fee every month which equals out to the payment. Then any time they pull from the utility they pay that difference as well.
Investor · Denver, CO · Member since 2013 · 34 posts · 12 votes
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We have panels from Real Goods Solar on our personal home and one of our rentals. It has worked out well. We like the company, and would not have been able to put them on if we had to pay for the whole system upfront. As for billing the tenants, this is how we handle it. Solar is a fixed amount all year long and then at the end of the year they do an audit and either charge us for the energy we created above what was estimated, or refund us the amount we paid for that wasn't created. The second part of this is the Xcel energy bill. Xcel keeps a running bank of what energy we create. So if we use more than we make, it is charged to us that month, if we don't it remains in the bank to be used next month. At the end of the year if we have energy in the bank we get a check for that amount. On the tenant side, we include the monthly solar in the rent, and then send the electricity bill to them when it comes out. They then send a check to cover that amount in the next week or so. It is not a perfect system, but has worked well for us so far.
One of the pieces we really like is that the lease is capped at 1% increase per year, Xcel has been averaging 7% increase per year lately. (I believe these %'s are right, but would have to look at our paperwork to make sure). While we may be paying around the same cost now, we will be substantially under the rest of the public in the last half of the lease. The one problem we have had is that the tenant took off with our monitoring equipment when he moved. We had to pay $150 to get the new equipment put in, but we took it out of his security deposit. If we had the choice we would put it on our other houses. Unfortunately, those roofs don't face the right way and we have too many trees around the house.
How does it work out with rentals? Do you as the landlord bill the tenant for their electricity usage and then pay the solar panel company from that?
Sounds like an opportunity to make a few extra $$.
I was planning on, when I advertise the property, letting potential renters know that there are solar panels so their electricity bill should be lower. My tenants pay all of their own utilities so this is like an extra perk for them.
Real Estate Investor · Columbia, MD · Member since 2014 · 172 posts · 94 votes
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This is not a way for me to make extra money on my rentals, just a way to attract better tenants. Also, maybe I could advertise that my rentals are more environmentally friendly in addition to more cost saving.
Rental Property Investor · Denver, CO · Member since 2013 · 4k+ posts · 2k+ votes
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@Sandra Holt It has been my experience that unless your property has many other green features and is a niche market to folks going all out green, you will not get one red cent in extra rent. You won't even likely attract more or better tenants. Most "cost savings" from features of a rental property are lost on tenants. Unless you can advertise at a lower price point they look at the creature comforts they want and the price and location and schedule the first 1 or 2 that fit the bill.
Real Estate Investor · Columbia, MD · Member since 2014 · 172 posts · 94 votes
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@Richard DunlopThe electric is always under the tenants' names, not mine, so I never have to pay when the unit is vacant.
Thanks to everyone for their replies. You all have given me a lot to think about. I'll post when the Solar City rep comes out next week to evaluate the properties in case anyone is interested in a follow up.
Solar City did mine (through a lease) and there were no out of pocket costs. Utility bills are lower than before and it's fixed that way, so I've been happy. I do, however, live in Las Vegas where we get far more sunshine than most of the nation.
I doubt I would put them on rental properties as it seems like there could be too many potential problems. If you lease the solar systems, that lease is in your name to pay the utility bills, whether you have tenants or not. If tenants run up the bill and don't pay it, it's still your responsibility to pay. You can come after the tenants, but does that really sound fun?
I'd like to know if there are creative ways to protect yourself from the potential tenant hassles. Keep us updated on it please
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
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I am checking into solar for a house we own in Shasta County CA, where the sun shines most of the year. However; in California from what I understand they have stopped allowing net metering, which is where they buy excess energy created. I was really hoping to be able to take advantage of that, because the house is on 20 acres and we could have done a big bank of panels, since with the drought the land isn't worth anything for agricultural use anymore. But.. no go. :(
However; @Danae Meurer mentioned banking energy, does anyone know of any companies that do that in California? @Dan Mackin
Investor · Cortlandt Manor, NY · Member since 2015 · 63 posts · 10 votes
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solar city is an evil company my mom got sucked into the solar trap as i call it and two years yea the bill was great she was saving about 85 a month but after that 2 year mark hit boom all of a sudden rates went up and she wasn't (putting credits back on the grid ) as they say so my mom put all of her lights on timers for at night and installed a system that she could shut lights off from her phone thew following month it went up again and she hasn't reached anyone to fix the problem in weeks they said it was an error in the line what ever that means. also just a thought solar panels hurt firefighting efforts if there ever is a fire in your house ( from a fireman if u can't tell )
Real Estate Investor · Columbia, MD · Member since 2014 · 172 posts · 94 votes
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@Richard Dunlop, I didn't know that I was responsible for the bill either way... I will definitely look into that because if that is the case, that's a deal breaker for me.
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
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@Sandra Holt when I read your post, I knew nothing of Solar City or these lease options, but my first thought was - there's no such thing as a free solar system.
My second thought was that it would be another thing to maintain. Even if it was just phone calls between you and the tenant and Solar City - it will mean more work for you, at minimum.
And then I wondered if there could be any issues with maintaining your roof under the panels.
Just doesn't sound worth it to me - even if you found a good company. Not on your rentals, anyway.
I am checking into solar for a house we own in Shasta County CA, where the sun shines most of the year. However; in California from what I understand they have stopped allowing net metering, which is where they buy excess energy created. I was really hoping to be able to take advantage of that, because the house is on 20 acres and we could have done a big bank of panels, since with the drought the land isn't worth anything for agricultural use anymore. But.. no go. :(
However; @Danae Meurer mentioned banking energy, does anyone know of any companies that do that in California? @Dan Mackin
I used to live in the Sacramento area a long time ago, and I could swear that the PUD for Sacramento had a solar program where they did the buy-back and banking deal, at least a long time ago.
Investor · Newark, DE · Member since 2014 · 245 posts · 198 votes
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@Sandra Holt the biggest catch is the 3.9% annual increase. Over 20-30 years, that adds up to quite a bit!
It was the deal breaker for me, but then I decided to look at the purchase option. They would still maintain it at no charge for 30 years, and pay me if it produces less than the estimate, plus I get 30% federal tax rebate! Yes, it will take 12-15 years to get my money back, but after that I have 15+ years of profit, and the system remains mine at the end. And I help the environment, which is a major win for me. I had it installed last fall, and got my tax rebate this year. I must say it is a great feeling to watch your meter spin backwards on a sunny day!
Let me know if you make the rentals work. I would love to do that, but I was told that the 30% tax rebate only applies to owner occupied homes.
Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes
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@Account Closed Actually they used to do buy back on power, but because solar is so popular in California, and people were dumping the utility companies, they sued, and are now they are working out a deal with the solar companies for payment for use of the grid. I read that in the future basically the power companies are going to end up being "the grid" while solar will deliver the power. Until then, there's a freeze on net metering which is what it's called when utility company buys excess power. Of course I just missed out!! Darn it.