A small problem with putting solar on your roof

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There’s a slight problem with putting a solar system on your roof: You may be radically reducing the value of your property.

Now, this doesn’t go for all homes. It’s specifically the case with home in cities where the zoning allows for denser development.

So, for example, consider an old 800 sq ft single family home in Los Angeles on a 6,000 sq ft lot zoned RD1.5.

Regular readers can instantly tell that 6,000 sq ft of RD1.5 zoning allows for the development of up to four units (1,500 sq ft per dwelling unit).

Now, depending on the neighborhood, that property might be worth $400-500k as a home but as much as $800-900k as a small-lot subdivision project.

What does this all have to do with solar?

Well, solar companies typically install panels on your roof for free but require you to enter into a long-term contract to buy power from them (or lease the panels).

Once you sign that deal, that’s it. Neither you nor anyone else can develop the property, because that would mean ripping down the house and removing the panels.

So, if you’re considering putting solar on your roof, make sure that your contract contains some kind of buy-out clause that allows you to get out of it in exchange for a one-time cash payment. Otherwise, you may be massively impairing the value of your property.

[By the way: Hat tip to DL for pointing this out!]

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