Investor · Ascutney, VT · Member since 2015 · 291 posts · 20 votes
been looking into going solar for when i flip homes. Guy is telling me that its going to cost $0 for the installation, the only thing that i will be paying for is the electricity bill "guarenteed lower rates for 2 years".
sounds like there is a catch, why wouldnt everyone do this?
Proceed with caution. Even with the current subsidies, solar energy systems don't generate enough power to pay for itself over any reasonable timeframe. They're getting closer to break-even, but they're not quite there yet. Ditto for wind power (even the giant windmills springing up all around the country).
But it wouldn't hurt to ask the salesman for a detailed break-even analysis. Maybe he/she can prove me wrong.
Proceed with caution. Even with the current subsidies, solar energy systems don't generate enough power to pay for itself over any reasonable timeframe. They're getting closer to break-even, but they're not quite there yet. Ditto for wind power (even the giant windmills springing up all around the country).
But it wouldn't hurt to ask the salesman for a detailed break-even analysis. Maybe he/she can prove me wrong.
Yea there is a catch. The catch is that the project will only make it through funding if it is occupied. A salesman will not know this, his only concern is getting you to sign on the dotted line.
Just FYI, the project only gets installed if there is funding. Also during this process there will be a pre-lien put on your house from the financing institution. They do this because they now have an "interest" in the solar system on the roof. This pre-lien could complicate selling the property for those clients or agents that are unaware why it is there and are hesitant to take on the property with an existing pre-lien.
I'd say you need to see what your clients want first. Are they open to a solar system? Are they OK with paying someone else besides or in addition to the local power company? Or are they looking to be as "off the grid" as possible? Until everyone has it or wants it I don't think it would be a good idea to blindly include Solar in the deal and even if you did install it don't finance it through a company that does it. Pay for it your self and cover costs in the sale (my personal recommendation). Otherwise you might get stuck with a product that drains money from you.
Remember, these solar companies want to make money. If it somehow gets installed and you cannot sell it or the client doesn't want to use it you cannot turn it off. Just about every contract out there prohibits the client from turning it off except in an emergency. By prohibit I mean fine you for turning it off.
You're absolutely right, we do want to make money as everyone who goes to work does. I see you're in Chino Hills and we work with a lot of HOA's in that area. Sounds like you're familiar with the HERO program or Cal First. I am very familiar with HERO. It's an excellent way to fund solar system. In theory, it can be subordinated so that it passes on to the next owner as it is in the Property Taxes. What buyers usually do is ask that the seller pays it off with the sale of the property. It also does not have a credit score qualification, so even someone with "hiccups" in their credit can qualify as long as they have 10% equity, no mortgage lates in 12mons, on-time property taxes and no BK in last 2yrs.
Sounds like the original question is based on either a Lease or PPA as I did read in there that it had a guarantee of lower rate in first 2 years. This is the catch that people selling these types of "solar deals" count on. They fail to say that there is an Escalation of 2.9% per year in there and that a new buyer probably will not want to have a lease or PPA passed on this them. I know a lot of Realtors and Brokers that have a misconception about solar because of deals that fell out due to a lease or PPA.
A purchase is a purchase and has value as does a beautiful kitchen, gorgeous pool and spa or simply new paint. My real estate partners agree that a solar home will have better bids and more $$ due to free electricity on the home. When it comes to paying an average of $2,500 per year to the electric company with a 7% inflation rate on it, Solar looks pretty darn good.
By the way, I am looking for more partners. One of my top guys is in Chino HIlls. Let's talk.
Of course there is a catch... no matter who says what, the system will cost money and so will the installation and someone has to pay of it... either up front, during a period of time or at the end.
If you are not paying for it up front then when you turn around to sell the house the buyer will have to pay for it and this has caused a lot of buyers to lose interest. Lenders also don't like to see these liens so even if the buyer wants it their lender may not.
Maybe when you sell the house you can pay it off, with or without prepayment penalties, but if this is the case do the math to make sure this improvement is worth it on your fix and flip project, it may not pencil out, it normally doesn't.