So you’ve been enjoying producing your own clean energy through your leased solar system for a good couple of years now and might be presented the option of an early buyout. So what’s next?
In the event your lease has this early buyout option, usually in year 6 or 7, you can buyout the remainder of your lease and own the equipment yourself. At this point, you might be wondering if it's more beneficial to stay in your lease until it ends, or buy it out and own the solar energy system.
We’ve put together the following points to consider for each option to help you determine what choice is the best for you and your situation:
Reasons to Buyout of Your Solar Lease
1. If you’re planning on selling your home soon, buying out your lease can add thousands of dollars in value when you go to sell. Instead of waiting till your lease ends or keeping the leased panels on your roof, the additional value added to your house can greatly outweigh the cost of buying out your loan. For example, if your buyout cost is $7,000, your system could add more than that to your home’s value, making it a reasonable and financially sound option.
- Keep in mind that leased systems add little value to your home. While some solar companies report painless lease transfers, it can still cause a headache. Some people also don’t like the idea of taking over a solar lease when buying, which could make your house a harder sell.
2. Your lease buyout amount might be cheaper than your monthly payments. This varies on a case by case basis, but some of the analyses we’ve seen show monthly payments around $14,000 versus a buyout cost of $7,000. This route would help you save money in the long run if your buyout amount is less than your monthly payment.
Reasons to Stay in Your Solar Lease
1. Staying in your lease gives you more coverage if anything goes wrong. Under a lease, all of your equipment is covered. For example, if your inverter goes out while under a lease, you won’t have to pay $2,000 - $3,000 for a new one. If you do buyout of your lease, the service and repair package included on your equipment will no longer cover you, but you will still have the manufacturer warranty. So if your inverter has a 10-year warranty and you’re in year 7, you’ll still have 3 years left on that warranty before you’d be on the hook for paying.
2. Sometimes the buyout cost is more than the value it would add to your home. This is another case by case basis, but if the buy out cost doesn’t make sense regarding what it would add to your home’s value, staying in your lease might be the better financial option.
There’s a lot to consider when you’re presented with the option to buyout your lease. We hope some of these points of consideration help make your decision a little easier. If you would like more guidance on what’s best for your solar situation, contact a solar savvy real estate agent, or one of our affiliates, Tara Rutkowski, a licensed real estate agent who specializes in solar homes at Tara@RutkowskiHomes.com or 623-640-6546.
If you're interested in adding solar to your home, we invite you to download our free solar guide, Is Solar Right For You? In it you'll learn the critical factors that contribute to a solar purchase decision.