Solar Panels on rental properties?

Question

Currently, I am under 18 and looking to buy my first rental property once I graduate high school. I was wondering if it is common practice whatsoever to install solar panels on rental properties? I feel like this could increase the value of your properties while inadvertently creating a small solar farm that could possibly create additional cash flow? Please let me know I am eager to learn, Thank You for any replies in advance!

Tim Milliano · Answer

I hope you notice everyone telling you not to get solar is not in IL.  Solar's ROI period is very much determined by you market. I would get quotes from multiple people to see what your actual numbers work out to be.  Right now IL has a state program-"The Illinois Shines adjustable block solar grant program provides a bunch of upfront cash when you go solar. When combined with the Federal 26% Solar Tax Credit, it can slash your solar installation costs by up to 65% on an average sized 6kW solar system."

I am not familiar with the program.  I'm in Denver now.  But it was good enough that my old company from St. Louis has set up a shop in Springfield, IL.  EFS energy I'm sure they could get you a way better idea if this will work for or not.  You can get your real numbers to make your decision on and not rely on random peoples feeling about solar.  Hope that helps.

Also solar panel technology is very reliable has not change much in 50 years. with 25 year warranty.  I don't know of any other product with a 25 year warranty.  There are panels put out in the desert in the 1950 that are still producing.  PV inverter technology does keep changing. Not always for the better for the consumer. The inverter is the weak point in the system and will need to be replaced anyways in 10-15 years. Last if you do get solar PLEASE buy the system. Lease options look attractive at first, but don't make you money in the end and are just a huge headache. Buy the system if you are going to do it.

Bill B. · Answer

No, it’s a pretty horrible idea.

Feel free to click on the magnifying glass in the upper right and type in rental solar panels.

Tanya F. · Answer

We have solar on our rental and the numbers work well for us. We've had panels since 2011 so we have a lot of data.

Yes, use the search function, you'll find a lot of threads that discuss this. Most of the naysayers don't have solar themselves.

Bottom line is, it depends where you are. There are a few folks with a lot of solar  experience on here who can help you with the calculations. Some states are more friendly than others in terms of many different parameters. This is a good resource for that https://solarpowerrocks.com/wp...

Adam Martin · Answer

I like the thought of it.  In a SFH where tenant pays utilities I wouldn't do it.  On a multi duplex or above where you pay utilities it may make sense if you live in an area that has both high electric costs and good rebates assuming that place makes sense for solar location wise.  I think though that I could get much better returns using the money as a down payment towards another property though and where I live in KY I won't get much if any premium for being green.  The price keeps dropping though as electric rates rise so at some point I think it will make sense.  I see my personal residence using more electric in the future as cars go electric and plan to switch my hot water heater to electric when it dies and may invest in panels.  With the current administration I see bigger rebates coming.  I also see us needing to find a way to increase the power grid as more and more people switch to electric cars.  Sure the grid is underused most days and designed for peak days but I predict that gap to shrink with more electricity.  I also worry about taxes on electric, right now the Gov. makes the biggest profits on the sale of gas with their taxes but what is their plan when their green dream of all electric vehicles comes true.

Bill B. · Answer

I live in vegas and they don’t make sense here. Maybe somewhere with more sunny days. (We only average 310 per year) or with more expensive electricity (ours is only 11 cents.). With 3 pool pumps and an electric car my electricity runs $50-60/mo 9 months out of the years and a little under $200 3 months out of the year.

So my electricity use is above average and my bill is about $1100/year. Most quotes were $13-$17k after the tax rebate. (Which you won’t get in the rental, so you’ll be $19-$25k) So if nothing breaks. In 12-15 years if everything works at 100% of new I’ll be even. In 25 -30 years, if everything works at 100% and nothing breaks I’ll have a 100% return on my money. Somewhere between a 2.5-3% return on my money is the DREAM result on the owner occupied.  It won’t be that good, but that’s the dream. Why in the world would I do that?

I’ll cut out the middle man. Give me a million $’s. In 12-15 years I’ll give it back to you. If everything works out perfectly. People act like saving on their electric bill with money they paid in advance is somehow better than just keeping the money and paying as it comes due. Or different than just giving me the money and I’ll pay your electric bill.

Lynnette E. · Answer

The return on investment for solar panel takes, what?, about ten years and the technology is out of date in about 5 years.  The systems can cause issues if you need a roof replacement say in ten years out--you do that ahead of the need, before the solar panels are installed.  So it can move capex costs forward.

Tenants will not value reduced rate or free electrical, but will just use more as its free.  Trust me on this one.  They will open the window for fresh air and run the HVAC unit of maximum since the electricity is free.  I think its better to just let the tenants pay for their own electricity.

Plus solar is an expensive form of energy generation.  Major power plants get huge federal subsidies to build.  Unless your area has a great tax rebate, don't consider it!

Tanya F. · Answer

we are landlords and live off our rental income. = Successful.

John T. · Answer

Are you in the landlord business or the solar power business?  If you want to own rental property and operate a successful rental property business, forget about investing capital into solar panels.

Tanya F. · Answer

Our system has exceeded productivity expectations over 9 years. Systems were more expensive in 2011, and it's already 2/3 paid for itself. That's at our rate of $0.15 a kWh. In places where electricity is more expensive, it'll pay for itself quicker. We added onto our system in 2019, I expect that will pay for itself quicker. It's a part of our plan to attract (and retain) excellent GREEN tenants. We provide garden space, we have ZERO vacancies, and our tenants are wonderful people. It works.

Nathan Gesner · Answer

I've been arguing against the financial benefits of solar on rentals for about ten years. Why? Because so many proponents claim to be making a good return on solar, but they won't share the numbers. Telling the OP to search the internet doesn't demonstrate viability and we all know solar performance depends on location. If it's been successful for you, why don't you share the numbers and tell us how you've managed to make a return that was worth the investment?

EDIT: this is a serious question that I've asked many times. I get about 300 days of sunshine a year and would love to use that resource to produce a financial return! Unfortunately, nobody has been able to show me how to make it work.

Solar Panels on rental properties?

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