Solar Shingles - effect on RE Investing?

19 Replies

Hey all, I was doing some reading on Tesla’s solar shingles (https://www.tesla.com/solarroof), and one of their selling points is that they can cut energy costs by 40-60 percent, and government incentives for solar energy can cut the installation cost down to near the cost of normal roof installation. My question is if the tax incentive for energy efficient home improvements counts for primary residences only, or if it works with investment properties too? Another question is if anyone had had experience using these on any investment property that needs a roof, whether flip or BRRRR? For flips, would a solar roof with lower energy costs and added tax savings be a selling point in some markets? For a BRRRR needing a roof, could this lower monthly expenses and help capture higher cash flow by reducing taxes? Finally, could this be a value-add on large MFs by lowering NOI?

I looked into these the capital expense of buying them is about 10 times that of a comp roof.

takes amny years to recoup.. i am thinking though of using them on a 2 mil spec I am doing.

I also own 2 Teslas' and love the company and the car.. I have an X and an S and deposit on a  3 I am sold on electric cars

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

shingles not worth it..... waste of $$$

This post has been removed.

@Tami R. I would agree, in most situations. But I am sure there are instances where the value added by these is worth more than the cost.

@Jay Hinrichs do you know if these things are eligible for bonus depreciation? Could they help investors looking to improve their tax position while reducing long term expenses?

we own a large roofing company and have looked very intensely into tesla and our management team are not a fan. We also live in a nice area where there's $$$ and we just don't see like this is the product yet.

@Tami R.   from my research cost is like us putting on a slate roof..

@Timothy Doenges   don't know on the bonus depreciation.. but remember you also have recapture..

so for me a new home builder.. its all ordinary income.. so its nothing I would spend any time on.

I just look at it as a sales tool.. just like people in our area build green earth advantage homes.. We don't but others do and really market that..

instead of dropping 75k on roof I am thinking I will Just buy a Tesla and put it in the garage and have it as an added bonus to the buyer.   kind of a sales perc.. we did this a lot when market soften..

You see it in high end ski cabins there will be a nice SUV included in the purchase.

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Timothy Doenges From my rudimentary research (who didn’t look into this?!?!) I care to the same conclusion. The only use cases that I can really see this being nifty is:

1.) If you had a new build in a high cost area where you did a solar roof, with a battery, and were marketing to plug-in car owners. So your roof (at least when it comes to marketing) is paying your electric bill, car gas bill, and making sure that blackouts/brownouts don’t impact you. And you have some “feel good” story about the environment to boot.

2.) Rural environments for those people who want to live “off-grid” but the spouse thinks solar panels are ugly. But the catch-22 is most rural properties won’t support this kind of money invested into a roof. And if there’s inclement weather you’d better hope you have a robust battery.

@Andrew Johnson   my target Is a home we are building in the historic district of Charleston..

I think anyone who also goes down this road needs to have a gas generator as a back up..

my friends in Hawaii though put power back into the grid with their roof top solar.. and it works there with power so darn expensive..  he has a Tesla as well.. so no power bill and no gas bill.. but then again he only drives about 3k miles a year living in Honolulu  :)

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

@Jay Hinrichs Yeah, it’s always an unfun scenario when you model out that you still need backups.  Not super expensive but it’s another “thing” which can de-sexy whole “Tesla system”.  And the last thing I  read was those whole-home-batteries were loud and ran hot.  I haven’t popped into the Tesla stores down here in San Diego to see if there’s a new version.

@Andrew Johnson well in Sunny Portland Solar while used is not all that popular. but if I was buying a SFR say in Vegas I would strongly think about it..

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@Andrew Johnson well in Sunny Portland Solar while used is not all that popular. but if I was buying a SFR say in Vegas I would strongly think about it..

Oddly, the residential cost of electricity in Vegas and other western desert metro areas is comparatively low ... which makes adding onsite solar a comparatively weaker economic option.  Vegas is something like ~13¢/kWh and Phoenix is similar.  Contrast that with areas like San Diego where it's currently ~22¢/kWh.

Granted the total use should be far lower in San Diego w/o the AC running.

@Justin R.   and with an EV car you get special rates as well.

in Portland we can charge our cars after 10pm and the rate drops to 4 cents.. so I am getting a full tank of energy for about 2 buckaroos.. so 3 to 4 dollars a WEEK is what I spend on GAS/Electricity to drive.

Times 2  its 6 to 8 dollars a week for my wife and I.. savings of 300 plus a month on gas.. at least. not to mention never have a tune up oil change or any other maintenance.. plus just bat S$$$ fun to drive..

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

Originally posted by @Jay Hinrichs :

@Justin R.  and with an EV car you get special rates as well.

in Portland we can charge our cars after 10pm and the rate drops to 4 cents.. so I am getting a full tank of energy for about 2 buckaroos.. so 3 to 4 dollars a WEEK is what I spend on GAS/Electricity to drive.

Times 2  its 6 to 8 dollars a week for my wife and I.. savings of 300 plus a month on gas.. at least. not to mention never have a tune up oil change or any other maintenance.. plus just bat S$$$ fun to drive..

Oh, totally.  When the utility offers attractive time-of-use pricing like that, it's even less of an economic motivation to generate your own power.  Depending on the generation source mix up there where you've got all that hydro power, generating yourself may be arguably worse for the environment anyways.

@Justin R.   Yup nothing better than Hydro unless your a salmon !!! :)  I also have a place in Vegas and there is some discount for EV there as well just moving down there IN March.. so see how it plays out.. but I don't spread sheet it or anything.. :)

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222

My opinions about solar on investment properties have "evolved" since I first posted on BP about the topic.

TLDR: Probably not worth it for rental properties, even with tax breaks, because of the cost/payback period, and the complication for tenants. Unless you are doing it for ethical/environmental reasons, then go for it.

MORE: I have 2 separate solar systems that offset 100% of the electricity for each unit of a duplex I own. Systems were "free" to install, but it's a lease, so I still pay the company (SolarCity/Tesla) for use of the panels, just at a lower rate per kWh than what the power company would charge. Essentially, it's the same monthly rate as if I'd purchased the systems and financed them over 20 years.

When the solar was installed in 2016, I lived in one unit and rented out the other. It made sense for me, since I have an electric/gas hybrid car and, well, I was living there. After I moved out, I still paid the solar lease, but I also had to compete for tenants with surrounding rentals that didn't have the added expense of the solar.

I figured out a way to structure tenant leases so that I wasn't simply paying for my tenant's electricity, but . . . it's complicated and tenants don't really understand it at first. You have to sell them on the idea. I keep the electricity bill with the power company in my name (because net metering erases all annual solar credits whenever the bill changes names) and put the monthly connection fee ($10) on autopay. The solar covers all the tenants' electricity (UNLESS the tenants start a grow op or try to get around gas heating costs by using space heaters. More on that later.)

To be marketable in my rental listings, I list the price I'd charge if I weren't paying for electricity, state that tenants pay for electricity, and in the description write, "ask us how the solar works." Then when they've seen the (beautiful!) property in person, I can explain, before solar was installed, the electricity averaged about $75/month, but now solar offsets 100% of their electricity needs. I tell them that I have a solar lease that I pay each month, so their cost for power (e.g. $65/month) reimburses me for that lease and is less expensive than what they'd otherwise have to pay the power company. I tell them, it's a flat rate each month, but if they use more electricity than the panels can produce, they are responsible and will get billed for the grid power ("but that's never happened to any tenant in the past, and unless you have a grow-op in the garage, haha, it's not likely to happen to you" <smile>). That disincentivizes them from wasting energy. Or growing weed.

Anyway, I'm also paying SolarCity each month, so solar isn't exactly saving me any money at this point. There are also laws in Oregon that if you pay for utilities, you can't charge tenants more than what you pay. (This is a gray area with a solar lease, however, since I'm paying a lease, not for power.)

Oh, and yes, I still am eligible for the state and federal tax credits (no more new Oregon state credits for solar effective 2018), but I haven't been able to claim them fully because I didn't have enough taxable income (and the state credits can only carry forward one extra year). So that's something to think about too, if you have a good accountant. ;) 

All that said, if you want to save the planet, and your roof isn't shaded by trees, please get solar.

@Timothy Doenges As Tesla's R&D team start to commoditize these products and make them affordable for many I think that is when the magic starts to happen. Not surprisingly, some of the products we use today started out rather expensive but over the time become much more affordable. 

In my research on the Tesla's solar shingles, I predict the same gradual product evolution. 

Originally posted by @Arthur Hebda :

Jay Hinrichs any thoughts of getting the Tesla Roadster!? Might as well get the whole lineup! They’re claiming a 620 mile range.

not me  too expensive.. I used to have a 50k cap on cars.. that went to 100k when I bough the X and S  250k nope.. I am set on cars for now... I am buying the 3  when I can get it for the advertised price of 35k .. and putting it in my second home for when I am there.  they are really a great car for that purpose.. you just leave them plugged in.. and they can stay ready to go for years at a time compared to a gas car when you leave them sit..  

Medium ksqoekox 400x400Jay Hinrichs, TurnKey-Reviews.com | Podcast Guest on Show #222