Solar guy, yes, real estate expert, no.
First off, I’m not recommending making solar part of the investment during a property flip. However, should a new property be purchased to move into, with the possibility of a future sale, then certainly, yes.
There are many factors to consider when deciding whether or not to make a solar investment when the real estate holding period is uncertain. Once those are considered, the property owner, having consulted with their realtor, can make an informed call.
Consumption is always a great place to start where solar is concerned. Enhancing the value and attractiveness of your property, with new windows, doors, insulation, HVAC, Energy Star appliances and variable speed pool pump, are all worthy of consideration before solar.
And when making that move, promoting low electricity bills can never be a bad thing when marketing your property.
With consumption addressed, the solar potential of the property is next on the list.
Unobstructed south and southwest-facing roof lines with solar panels will produce the most power. Can these accommodate the required number of panels to address electricity needs? Ideally, 12 months of utility power records, to establish year-round consumption, will best aid the design process.
Shop around to get the best price on your solar electric system. Look at a few different quotes in terms of $/kWh, based on the upfront cost and how much electricity the system is predicted to produce over its lifetime. This combines not only an attractive $/kW installed, but also an effective design with panels that operate efficiently in the heat and degrade minimally over time.
Then, how a solar electric system is acquired will impact the decision.
Paying cash upfront will eliminate any early termination fees associated with some financing options. More attractive interest rates and payments can add 20 – 30% in dealer fees to arrive at the financed price of the system. Hence, if the property seller is asked or required to pay out the financing with a sale, the cost will be that much higher.
Solar leasing can be even more punitive. It is much less likely that the property buyer will wish to take over the lease. Buyout provisions often require all future lease payments to be made. These can be twice as much as the cash price to purchase the same solar electric system brand new.
Bank appraisals typically give zero value to financed solar and a negative value to leased solar. A well-prepared evaluation of solar savings versus utility electricity can persuade the appraiser to increase a property’s appraised value with an owned solar electric system.
Efficient consumption, great sun exposure, a well-designed and priced system, with quality panels and cash purchase will give the owner the best opportunity in the future to successfully market and receive fair value for their solar electric in a property sale.
Make an informed decision!