Financial Feasibility of solar electric for rental properties?
I am new to real estate investing, but I have had an idea for a long time. The numbers are finally to a point where this idea makes sense to me. I am a solar contractor in Florida, I do mainly residential photovoltaic installs. I want to get an opinion of some people who own rental properties. I guess to do that we should use a theoretical example.
Let's pretend that we have a rental property that rents for $1,000 per month, electricity bill is $180 per month average. Rather then the tenant paying the electricity bill, the owner pays it and charges $1,200 per month rent rather than $1,000. Except you don't have $180 to pay, you only have a $9 connection fee to pay.
Over 10 years you will have collected an additional $24,000 from that unit (in a perfect world) - $1,080 in connection fees over the 10 years, leaving you with $22,920.
We can use a 10 kilowatt system to eliminate the electricity bill, something that I install regularly on residential for anywhere between $20,000 to $26,000 depending on roof type, roof sections, county wind speed codes, and a few other factors.
All equipment has at least a 12 year warranty, so it is guaranteed to have paid for itself at least once before its out of warranty.
If we use a $20,000 system as an example, you're ahead of the game without any incentives at all, but you will be able to use 30% of the cost as a tax credit, and depreciate another large amount. Usually writing off 50% of the system, leaving you with an out of pocket cost of $10,000. While increasing your property value, reducing carbon foot print, increasing cashflow, and make the rental property more appealing to high end consumers.
It seems like a pretty solid plan to me, and I plan on implementing it when I get some rentals, can any landlords give me their opinions on this?