The Solar Box That Could Cost You $40,000 on Your Next Investment Property

In this short video, Marc Santos of Rapid Fund Lending points out a small detail that can turn into a big expense: a solar system on a property you're buying. Marc explains the three main types of solar agreements, why a loan is usually the best situation for a buyer, and how to protect yourself in the purchase and sales agreement so solar doesn't delay or derail your closing.

Key Takeaways

• Solar can cost you $40,000 or more if you aren't paying attention when buying an investment property.

• There are three main solar agreements: a loan, a power purchase agreement (PPA), and a lease.

• A loan is typically best for a buyer. You own the panels and the system, but the loan is a lien against the property that needs to be paid off.

• PPAs and leases are different. The new buyer has to be underwritten by the solar provider, which can delay the closing or even terminate it if the buyer isn't approved.

• Put it in writing. Agree with the seller in the purchase and sales agreement on who pays off what, and make sure everyone discloses the total costs.

• Be proactive. Solar almost always delays closings when it isn't addressed in advance.

In This Article

• The Solar Box That Could Cost You $40,000

• The 3 Types of Solar Agreements

• Why a Loan Is Usually Best for Buyers

• How a Solar Loan Works (Lien on the Property)

• Getting It Paid Off in the Purchase & Sales Agreement

• PPAs and Leases: The Buyer Must Be Underwritten

• Get Everything in Writing

• Why Solar Almost Always Delays Closings

• Be Proactive: Negotiate It In

https://www.youtube.com/watch?v=rPPfYMSMF0c

Property owners typically have one of three solar arrangements: a loan, a power purchase agreement, or a lease. For a buyer coming in after the fact, a loan is usually the best of the three. It is a lien against the property, but you own the panels and the system, so it simply needs to be paid off. Put that payoff into the purchase and sales agreement so it is clear whether the seller or the buyer is responsible for it. With a power purchase agreement or a lease, the situation is different: the new buyer has to be underwritten by the solar provider. That process often delays closings, and it can end the deal entirely if the buyer isn't approved to take over the agreement.

The best protection is to address solar early and in writing. Agree with the seller in the purchase and sales agreement on what will be done, and make sure everyone discloses the total costs and what needs to be paid off, so each side understands the effect on the seller's net payout and on what the buyer needs to pay for the property. Marc's experience is that solar almost always delays the closing when these steps aren't handled in advance. When you see a solar box on a house, be proactive and negotiate it into the purchase and sales agreement.

Result

A small solar box can mean a $40,000 or larger surprise if it isn't handled up front. Identify which type of agreement is on the property, get the payoff or approval process in writing, and you can keep your closing on track.

Working With Me

I evaluate each request on a case by case basis. Getting started with hard money doesn't have to be complicated. The key is understanding that these loans are designed for speed and convenience on real estate investments, not long-term financing. If you have a project that could benefit from fast, flexible financing, I'd be happy to discuss your specific situation. You can start your hard money loan application online to get going.

The information provided here is for educational purposes only and does not constitute financial or investment advice. Always perform your own due diligence and consult with qualified professionals before making investment decisions.