Many real estate owners don’t consider their roof as an income producing space. Usually, the only time owners think about their roof is when there's a leak. However, adding solar panels to a roof can provide an excellent source of miscellaneous income while also benefitting the environment. The revenue created by selling the energy, plus the federal tax credits, rebates, and bonus depreciation allow for big returns.
Solar Energy Revenue + Federal Tax Credits + Local Rebates + Bonus Depreciation = Positive Returns
Our most recent project is an excellent example of value creation through solar paneling. The owner we represent has comfortably owned a warehouse in Long Island, New York for the past 40 years. Yes, it has consistently produced a steady stream of income, but the property could now do better. We were hired to conduct a best use case study and assess if the property was maximizing revenue. Like many other long term holdings, our analysis revealed that the property was not meeting its full income-generating potential. We found that the property’s revenue could be increased by 20% with the addition of solar via Community Solar. Additionally, Long Island, New York and Public Service Enterprise Group ("PSEG") have the infrastructure to handle large solar projects. After seeing the benefits, the owner agreed that it was an obvious choice to move forward with the solar development.
Now what? To receive the full monetary benefits of solar panels, you are required to purchase them, opposed to leasing them. There are two options when it comes to purchasing solar panels; either purchase the panels out right for cash, or finance the solar panels through debt. C-PACE financing allows owners to receive a long term, fixed loan at favorable rates. C-PACE is a public-private debt financing program for clean energy projects. As C-PACE covers all things energy related, you can often include a new roof in the development scope of work, which entitles you to the aforementioned benefits and additional savings.
The major benefits of C-PACE include, but are not limited to: · Upfront financing
· High LTV ratios
· Long term (20+ Years)
· Cash flow positive from day one
· Increased property value & NOI
· Transferable upon sale of property
Solar panels are a great way to boost your property's income; however, if you are not interested in purchasing solar panels, there are companies who will rent your roof and cover the cost of installation, labor and materials. This is also a good option, but returns are typically less due to the lower risk profile.
Please feel free to reach out directly if you have any questions about Nexjen services. We would welcome the opportunity to connect with you and see how we could work together.
Nexjen's mission is to help real estate owners maximize the value of their real estate portfolio through market research, knowledge, and industry relationships.