Vivint Solar on Multi Unit property - 4plex
Rental Property Investor · Lancaster, CA · Member since 2015 · 103 posts · 55 votes
Talking with Vivint solar right now about installing solar for all of my 4plex units. Talked to my insurance company and they don't seem too confident with me doing this. They have concerns about who takes care of any unforeseen damage that it could cause to the property such as wind, snow and other things out of my control. The payments go up 2.9% every year and it seems that it wouldn't be fair to my tenants but power from So Cal Edison goes up every year too.
What are your experiences with adding solar to a rental property? Good or bad?
Hi Steve,
My name is Stefan, I'm a new member to biggerpockets and was scrolling the forums and saw your post. I have worked in the solar industry for about 3 years as an engineer. First starting out with a residential company in NY and now for larger company focusing on commercial and industrial projects in LA.
Few questions/advice I have right off the back:
1. Where are your rental properties located (this will help me with snow and weather related concerns) ?
2. Most racking (roof attachments) that solar companies use are from manufactures that have been UL tested/certified. A lot of these manufactures also do their own testing to withstand certain wind speeds, snow loads, etc.. You can easily have Vivint solar obtain a letter with a professional engineer stamp showing the maximum wind speeds the racking can handle.
3. What are are the specific concerns your insurance company is worried about?
4. You might be able to get the solar company to have a local professional engineer provide a letter to the insurance company regarding other concerns they may have. For example how much weight your roof can hold and how much solar can be installed considering factors such as snow loads. This type of report is typically called a "solar structural feasibility report".
5. Most insurance companies are hesitant to include solar because they are just not familiar with it. A well designed system, that is reviewed and stamped by a local professional engineer should be able to last on your roof for at least 25-30 years without any issues mechanically.
6. I do recommend re-roofing your roof if its over 8-10 years old. The solar federal tax incentive will consider your re-roof part of the solar project if you choose to go solar so you can receive a 30% tax credit on that work as well. Ask Vivint solar, they would be able to tell you.
7. Lastly I'm glad to see your considering solar. Its a great investment and probably a good selling point for new tenants!!!
I hope this helps!!! If you have anymore questions I'll be glad to answer them.
Best - Stefan
Hi Steve,
My name is Stefan, I'm a new member to biggerpockets and was scrolling the forums and saw your post. I have worked in the solar industry for about 3 years as an engineer. First starting out with a residential company in NY and now for larger company focusing on commercial and industrial projects in LA.
Few questions/advice I have right off the back:
1. Where are your rental properties located (this will help me with snow and weather related concerns) ?
2. Most racking (roof attachments) that solar companies use are from manufactures that have been UL tested/certified. A lot of these manufactures also do their own testing to withstand certain wind speeds, snow loads, etc.. You can easily have Vivint solar obtain a letter with a professional engineer stamp showing the maximum wind speeds the racking can handle.
3. What are are the specific concerns your insurance company is worried about?
4. You might be able to get the solar company to have a local professional engineer provide a letter to the insurance company regarding other concerns they may have. For example how much weight your roof can hold and how much solar can be installed considering factors such as snow loads. This type of report is typically called a "solar structural feasibility report".
5. Most insurance companies are hesitant to include solar because they are just not familiar with it. A well designed system, that is reviewed and stamped by a local professional engineer should be able to last on your roof for at least 25-30 years without any issues mechanically.
6. I do recommend re-roofing your roof if its over 8-10 years old. The solar federal tax incentive will consider your re-roof part of the solar project if you choose to go solar so you can receive a 30% tax credit on that work as well. Ask Vivint solar, they would be able to tell you.
7. Lastly I'm glad to see your considering solar. Its a great investment and probably a good selling point for new tenants!!!
I hope this helps!!! If you have anymore questions I'll be glad to answer them.
Best - Stefan
Hi Stefan, the property is in Rosamond Ca so it can snow there but not too much and not very often. My main concern is wind. The winds in the desert can become really extreme and I've had it blow roofing tiles off.
My main concern right now is it will need a new roof in the next 2 years and I would have to pay for the removal and reinstall to Vivint.
My insurance agent is concerned about who is responsible for the damage if something bad does happen. Vivint claims they're insured separately and they would cover any damage caused by their system as long as it is because of their installation. My agent is also a friend and they were concerned that it could be a problem when selling the property if the new owner doesn't want to use it.
They increase the payment to my tenants every year by 2.9% and I'm not sure if that's fair to them if it's more than what Edison is increasing their regular payments to.
Steve,
Regarding wind. I'm fairly confident that Vivint will have or can find a racking solution for the highest wind loads in Rosamond,CA. Racking companies such as Unirac and Ironridge have products which are tested to withstand 125mph winds (ironridge product specifications). You can also easily obtain a professional engineered stamped letter from them to show your insurance company.
If you have to replace your roof in 2 years I suggest doing it with the solar install now. You will receive at 30% tax credit for the cost of the re-roof if your doing it to get solar. If you wait 2 years to replace the roof then you would have to pay a solar company in this case vivint to remove the panels and then also pay full price for the re-roof. In my opinion not worth it if you only have 2 years left on the roof. The way this typical works is Vivint can work with your local roof installer and include the cost of the roof replacement in the solar installation cost. This is the easiest and simplest way to claim the 30% tax credit. The other way is to show the roof replacement and solar install as separate and claim them both separately when doing taxes.
Vivint is correct when they are saying they have a workmanship warranty. Typically these are 10 years and cover any issue that come up with install related problems such as a panel coming off the racking, roof leaks, attachments coming off, and electrical work. In the case of the panels flying off due to wind, typically this claim typically goes to the manufacture of the attachment system. First they will send a representative to make sure the installation of the racking was done according to the installation instructions. If the representative finds that the install was done correctly they can work with you and your insurance . On the other hand the representative can find that vivint installed it incorrectly and that would fall under the workmanship warrant that Vivint provides.
If a future home buyer doesn't want the solar on the home you can easily have a company remove the system. It is much cheaper to remove the system vs installing it. But most people are open to solar. It provides a lot of benefits to a home owner. But in the worst case, you can get a quote from Vivint for a future removal if needed.
Who do you mean by "They"? Vivint increasing the payment? If that is the case then it sounds like a lease option you are looking at. I recommend staying away from a lease option and try and get an option where you own the solar system. This much better financially in the long run.
While I was working in New York many residential solar companies went out of business due to the fact the lease model wasn't sustainable. My advice above is also based on you owning the system rather then leasing it.
@Steve Graves what type of incentives are they offering you as the owner? I had a very interesting conversation the other day with a solar company that does work here in Illinois under the "Illinois Shines" initiative. They lease the roof space from the owner and then sell the electric to the tenants and the owner. They claim to sell it at a discounted rate, although I find that hard to believe personally. I am curious if this is similar to what you are being offered. They were very interested in two of my apartment buildings in Berwyn and Lyons, IL because I have large, flat roofs that are easy to install on top off.
Of course, you are in California so this totally makes sense to explore. I am still a bit curious how they can make this work here in Illinois, especially today as it is -20 and cloudy!
@Stefan Pougatchev Yes, it sounds like a lease program but the salesman stated to me it's not a lease because they still own the system. Well, to me it sure does sound like a lease. I get no tax incentive, it all goes to them since it's their system. Thanks for the info on getting 30% off for the roof placement, going to look into that. I've been learning all I can about solar in the past couple of days and I've been reading the same thing you're saying, it's a much better deal if I buy the system.
@John Warren It does sound similar to what you're being offered. They take any tax incentives in exchange for no upfront cost or maintenance costs to me. I'm still doing more research on if this is a good decision or not and I'll post back here any more info I find out. I'm hoping that another landlord that has done this recently will see this post.
Yes, it does seem to be a discounted rate for the first year then it goes up 2.9% every year on my tenants. The more I look into it the more I don't want to be locked into a 20 year contract.
@John Warren It does sound similar to what you're being offered. They take any tax incentives in exchange for no upfront cost or maintenance costs to me. I'm still doing more research on if this is a good decision or not and I'll post back here any more info I find out. I'm hoping that another landlord that has done this recently will see this post.
Yes, it does seem to be a discounted rate for the first year then it goes up 2.9% every year on my tenants. The more I look into it the more I don't want to be locked into a 20 year contract.
@Steve Graves I would highly recommend staying away from the lease options.
Most companies should have an option where you can own the system. You will own the system and be able to claim the tax incentives. It is a higher upfront cost but over the years the system will pay its self back (4-6 years).
@John Warren location definitely plays a factor when designing a solar system. Tempature also plays a factor but not a big one. An experienced solar designer will be able to design a system that factors in cloudy days,rainy days, and snow fall. For example when I was designing systems in New York I would factor in about 2-4 weeks of little to no solar production when presenting my calculations to the client.
I would also recommend getting quotes from multiple solar companies. Never go with just one. And if your not confident with which one to go with I’m more the happy to compare quotes with you guys and give you my opinion for the best option.
@Steve Graves the biggest struggle I have is it is a lease option. With the leased solar panels the lease would follow the home and if you try to sell the home within the 20 year window the buyer would have to agree to the terms.
If you cannot get the buyer to agree to the terms a lien will be placed on the house.
Also, if you don't have to replace your roof right away does it make sense to pay the $10,000 to re-roof it now?
There are other options such as; solar shingles and purchasing the solar system outright.
The 30% Federal tax credits will not be paid to you as these are rental properties. You will be able to depreciate the system on a 5 year schedule though which is a really good deal but only if you own/finance the system. That will apply to the roof required to be repaired/replaced to accommodate the system.
Fannie Mae allows for a full appraisal of the value of the system in appraising the property IF the system is owned/financed. Fannie Mae explicitly disallows appraisal of a solar system if leased or a PPA.
For cashflow then a lease may be a better bet. For equity then ownership is the way to go especially as others are paying for the system if presented correctly and you can appraise the full value when selling the property. The 5 year depreciation is attractive.
As others said the lease would have to be assumed by a willing buyer at time of selling - not always easy as there's no appraisable value.
Sadly the solar tiles are a non-starter. Their cost is astronomical compared to rooftop systems. Most of the tiles will not generate power and they have thousands of connections for failure points. Solar tiles are for the 0.1% economically who want to be the cool kids on the block.
Hi all, I looked into going with Vivint or Solar city for a 20 year lease option a few years back, but ultimately decided against it. These were my reasons, some of which were already mentioned above:
- The cost of the system was exorbitant... basically they were playing with their numbers to max out the government incentives. There was no cost to me, but I also would not be benefiting from the incentives financially.
- They planned to raise rates every year according to a schedule, I.e. regardless of what market conditions are. In my projections, my energy costs would exceed the costs of staying with my local utility after about 5-7 years.
- They would have the right to use my roof FOR FREE for 20 years, but my energy would not be free and I would have no ownership of the system. Quite the opposite... any extra electricity generated on my roof would not belong to me, and instead would be used to make them more money... So my roof becomes their free power plant, for 20 years...
- The 20 year catch as described above, especially issues related to trying to sell the home in the future if buyers did not want to be locked into steadily increasing electricity rates year after year.
- Bottom line, my recommendation, in line with others above, if you can afford to buy the system outright, do that. Don’t however buy it outright from one of the above companies whose business is leasing systems. You will pay at least double what you would pay another company to install a turnkey system.
@Stefan Pougatchev
Thank you for valuable insight about the roofing subsidy.i am going for solar on my primary residence in NC.
1.do the rental properties qualify for the 30%
Subsidy?
2.how do we bill the tenants ? Do we make them pay the solar loan payments ?
Or we bill them for the number of kWh based on local utility company rates ?
@Steve Graves am I missing something. Why are you worried about you're tenants utility cost? Is it way way high compared to other rentals?
Simple upgrade Led light bulbs to reduce electricity. Cheap simple and can do as you go.
I would stay away from this as you're responsible ultimately for the power if you sign the agreement. Tenants don't pay. now you double whammied yourself.
I look at it this way. You lowering there utilities I don't really see increasing you're rents really. I would rather invest into upgrades that let you increase the rent (unless you're rent control and somehow this increases you're rent roll?) or invest in something else.
just my two cents
Totally agree with Pete. I have thought about this as well and see if I could ever increase rent if we add solar (and also a green side of me). However, liability is the key that avoid me from doing it. Another thing is if one of the unit is using way more electricity than other units, but get offset by solar, it's not fair for other units. To solve this dilemma, you will need 4 separate set of solar which need 4 separate inverters and that's very costly.
Unless you have to pay for electricity in your rental (which are rare for 4plex), it doesn't make much sense unfortunately.
To echo Pete comment, I think adding better appliances might be way better option.