Solar panels on rental property?

Portland, OR · Member since 2016 · 29 posts · 10 votes

Hey, new here. I don't own a rental property myself, my dad used too, but that was more from necessity. Hopefully one day I will, but I'm fifteen now, and more worried about paying for college. However, I'm part of a startup and we're looking at helping landlords get solar on their buildings and pay for it through a separate lease or PPA with the tenant. I was wondering if any of you had ever had experiences with solar power on a rented property? Did you do it? Why or why not? What was the experience like?

I appreciate any feedback you can give me.

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Eddie T.

Rental Property Investor · NY · Member since 2013 · 844 posts · 350 votes

10y

@Eli Winkelman What about a roof that has years left. Who is going to pay for removing all the panels to install a new roof and then installing them again?

How many years of savings will it take to recoup the cost of installation?

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Account Closed
Rental Property Investor · Portland, OR · Member since 2015 · 338 posts · 332 votes
10y
@Russell Brazil you're right; I don't know your market. Here in Portland some realtors are afraid of solar because they don't know whether leased panels could make a deal not happen.
I'm sorry to have questioned your motivations. I feel strongly that renewable energy is the key to our continued success and prosperity as a species, so it's true that I react strongly when people make statements that might dissuade other people from moving in that direction, especially if those statements may not be backed up by solid research.
What I can't completely understand is, how would any realtor know whether solar decreases home values, unless they had two parallel universes in which to test out their hypothesis? Homes sell at different prices for all sorts of reasons.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Originally posted by :

What I can't completely understand is, how would any realtor know whether solar decreases home values, unless they had two parallel universes in which to test out their hypothesis? Homes sell at different prices for all sorts of reasons.
That would be the same case for any feature of a house....but when you over time work with hundreds of buyer and sellers, you learn intuitively what creates value, and what causes values to go down. And that is the business I am and other agents are in, assigning and understanding those values. Does it have a new kitchen....what color are the cabinets, what color are the counter tops, what color stains are on the floor, does it have solar panels. And what creates value in neighborhood X, can actually cause a negative value in neighborhood Y. Further it changes over time as the population in an area changes over time. A modern design might be great in a neighborhood of thirty somethings in an urban environment, but wont fly in a 60 something suburb. There is no way to exactly measure the value of any one feature, but agents who do a lot of business usually can tell you pretty accurately how much value something creates. Experienced flippers often can as well. (Which I also do)
And where solar panels are located on a home does make a huge difference in my market place. It is a huge issue when they are on the front of the property, and much less of an issue if they are on the back and thus not seen. It also does matter where in the metro area it is, as they are less of an issue on multi-acre lots, and more of an issue in a smaller quarter acre lot home. In the city proper the neighborhood matters as homes on the east side of Rock Creek Park they will affect the value less than homes on the west side of Rock Creek park.
I have little doubt that in 30 years most homes will have solar panels, but at this point in history, in my market, I would not get them. If I operated in a different market then maybe I would. Here though people are not concerned with saving a few bucks on their electric bills because that is such a low percentage of our overall spending.
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Nate Wightman
Investor · Denver, CO · Member since 2016 · 213 posts · 57 votes
10y
http://costofsolar.com/is-my-home-worth-more-with-...
an interesting link... if you keep following links it looks legitimate
it says values go up $5911 per 1kw or 3 times that for a 3kw system
and ultimately all goes back to here.... This research builds on work published in 2011 entitled “An Analysis of the Effects of Residential Photovoltaic Energy Systems on Home Sales Prices in California,” LBNL- 4476E, which can be downloaded here: http://eetd.lbl.gov/ea/emp/reports/lbnl- 4476e.pdf.
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Nate Wightman
Investor · Denver, CO · Member since 2016 · 213 posts · 57 votes
10y
I just heard on public radio that the nuclear industry can no longer compete with green energy so no more nuclear plants...LOL.... had to...
also read that the reason OPEC was not cutting production is that they are thinking oil may not go back up so they are dumping all they can at $40... I have no clue but it was an interesting thought
One last thought on oil... it is the perfect carbon product.... if you scan your area right now half of everything you see is made from or with oil.. plus or minus... it is like a perfect building block which is why so much is made from it.. So, burning it for autos or heat or electricity is just crazy.... it is to valuable for that.... I may not have said this well but think i am on the right path.
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Nate Wightman
Investor · Denver, CO · Member since 2016 · 213 posts · 57 votes
10y
Researchers found that buyers were willing to pay a premium of $15,000 for a home with the average-size solar photovoltaic system (3.6 kilowatts, or 3,600 watts), compared with a similar home without one. Put another way, that translates to about four additional dollars per watt of solar power. found here.... http://www.nytimes.com/2015/02/22/realestate/solar...
newer info .... for what it's worth
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Eli Winkelman
OP
Portland, OR · Member since 2016 · 29 posts · 10 votes
10y
@Nate Wightman
What you're saying is similar to what I've heard. However I know of the study you referenced, it was done only in California, where solar will bring up the value of your house. I think that in many areas people will pay more for solar, but in some they're still viewed as ugly things people don't want. In Portland they have become much more common and accepted, they're not viewed as just an eye sore anymore.
As far as the side of the house it's on, we almost got a PPA a couple years ago, but the panels would've gone on the street-facing side of our house, and we ended up not doing it because people thought it would be an eyesore.
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Tanya F.
Rental Property Investor · Madison, WI · Member since 2013 · 629 posts · 339 votes
10y
Where does that come from? Why do people think panels are eyesores? Are metal roofs eyesores? Roof vents? TV antennas? Satellite dishes?
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Lane Kawaoka
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
10y
A tenant wants a dishwasher that will cost me 500. If there is not at least 20% irr on the 500 then I don't think its worth it - ie increase in rent by 50-100 per year. This is how large companies make decisions for example a 5 Million dollar storage facility will increase profit by 1 million (1M/5M=20% per year)... now that works. Recognizing that there is some intangible costs but that should be very fractional for example lost rents if you piss your tenant off my not complying with their request for the dishwasher they might/or might not move out. You can try your best to quantify this by saying its a 50% chance they will move out multiply that by $600 vacancy costs (2-3 weeks of vacancy). 50%x600=300. Those are the numbers not make your informed decision.
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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y
Originally posted by @Tanya F.:

Where does that come from? Why do people think panels are eyesores? Are metal roofs eyesores? Roof vents? TV antennas? Satellite dishes?
In many of the neighborhoods in my market antennas and satellite dishes would be considered eyesores, and would be taken down if the house is sold. In those neighborhoods it is very likely a neighbor would ask the owner to take them down.
Other neighborhoodside they would be perfectly acceptable. Though the ones where they are not, are the same areas solar panels would be an issue.
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Nate Wightman
Investor · Denver, CO · Member since 2016 · 213 posts · 57 votes
10y
@Russell Brazil and this may be the issue... some neighborhoods may be opposed and some may be OK with panels. maybe higher end areas don't like and middle income homes may appreciate....
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Eli Winkelman
OP
Portland, OR · Member since 2016 · 29 posts · 10 votes
10y
@Nate Wightman @Russell Brazil It might also matter on the particular style of the house, the type of panels, and how they're laid out. For example, an older house with polycrystalline panels arranged on different areas offset from each other (like this), in a higher end area, would definitely lower the value. However an install more like this, might raise value, even in a high class neighborhood.
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Adam Sankowski
Investor · Somerville, MA · Member since 2017 · 191 posts · 204 votes
7y
@Eli Winkelman Hey Eli, just discovered this thread from 3 years ago. First off, bravo to you being 15 just clearly being super smart ! You're 18 now right? So... did have things turned out... did you get this company up and running? I have 1 rental in Kansas City and 2 in Indianapolis and I'd love to get solar on them and set something similar to this up. Let me know if you're still doing this and how its going?
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