Jeff Evens below nails it for equipment that is leased over a specific period of time. Imagine this:
1. You get a fixed lease rate based on the value of the equipment over a number of years, projected savings AND government incentives. If the lease is terminated early, then the government incentives disappear and the cost to buy out the lease increases dramatically. As in, ridiculously. We had an amortized â€œpayoffâ€ amount of approximately $8,000 escalate to over $20,000 when we tried to pay off a lease early.
2. Certain types of loans will not allow any lender or lessor to subjugate behind them â€“ FHA is a prime example. In other words, FHA will not allow a lease to subjugate behind their loan. Which means the lease has to be paid off. See #1 above.
3. Solar companies are willing to transfer their leases, BUT, they have to subjugate to any other existing loans. Which means they have to release their lien on the property so that the mortgage can record in first place â€¦ and how many leasing companies do you know that will release â€“ even for a second â€“ any liens that give them security for their leases? See #1 above.
4. The irony here is that a federal program â€“ FHA â€“ will not work with another federal program â€“ subsidies for solar equipment.
Let me add one more thing just for giggles: although a buyer is not going to be willing to pay extra for solar equipment, I can guarantee to you that they will insist it is in full working condition at close of escrow â€“ even if you have to cough up additional funds to get it working at capacity.
This subject touches on the exact conversation we had at our meeting this morning. Adding solar paneling may bring more buyers in but will be another financing loophole for the buyer to go through when trying to get funded. Not only will they need to get approved for the home but they will need to be approved through the solar company as well. This is a turnoff for many buyers. Solar pays off if you plan on staying in the home. Unfortunately it will not increase the value of your home more than 10 percent of the cost of equipment and installation. In this case you may realize an increase of possibly $3,000. It's important to weigh out other more important factors in selling a home such as updated kitchens and bathrooms if you are trying to increase the resell value of your home. There are tax incentives for installing solar energy systems in California but it is very important to contact your County Assessors Office for exact details and information before you make the big decision. I've attached the link here for Larry Ward which would be your contact point for Riverside County. I hope I was able to give you a little more insight on the subject and would love to help if you have any further questions.
A true Realtor sales pro will be able to advise you on what will give you the best bang for your buck and help you forecast a projected profit from a future sale. (Note: I have a crystal ball, can't find the switch to turn it on or I would provide this information for you). It's important to note that solar, as trendy as it is, is not an improvement to value unless the home itself is an energy hog.
Additionally, solar technology is changing as fast as Apple goes from the I-4 to the I-5. Remember when the first HDTV cost a few grand and now you can buy then for a few hundred. That will eventually happen to solar as well. My opinion but just watch.
I am in the middle of putting solar on my home right now and have met with 4 companies and have heard every sales pitch out there. Your situtation is very similar to mine and we elected to do the 20 yearr solar lease, with no money down. Our bill goes from $335/mo to $194 and the balance of the lease transfers to the new buyer when you sell the home. Just another option if you aren't planning to stay in the home 10+ years. Let me know if you need any additional information.
Have a great day.
Please wait until you are in a more permanent setting before adding this feature to your home.
If you owe money on your home I would look into paying an extra $30,000 on your mortgage.
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Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.