THINKING OF INSTALLING SOLAR PANELS AT YOUR HOME? FIND OUT ALL THE PROS & CONS

Installing-SOlar-Panels

If you want to save money on electricity in the long run, you should consider installing solar panels. While installation expenses might be considerable up front, the cost-benefit analysis is clear: Installing solar panels on your home is both cost-effective and ecologically friendly. Solar energy can help you save money on your electricity costs while also earning you tax benefits. Solar panels are also a good investment since they increase the value of your home and are tax-free.


Pros of getting solar panels to your home:


When selecting whether or not to install solar panels, there are several benefits to consider, including:

 

  • You can save money on energy bills 


Solar energy has the potential to save money when compared to traditional energy sources. Depending on your state, house size, and power usage, you might save anywhere from $10,000 to $30,000 over a 20-year period. Paying off a solar panel installation generates a return on investment, unlike paying electricity bills. Solar energy may also be sold back to the grid, allowing you to make money while saving.


One of the most significant advantages of solar panels is that they may help you save money on your power bill. Many states mandate utilities to provide net metering, which allows homeowners to use the energy generated by their solar panels to offset their electric bills.


The extra energy can then be sold to the utility. This is normally applied as a credit to their power bills, which may then be used to offset future electricity expenses.


 

  • Government funding is available


When you install solar panels in your house or company, you can get federal and state tax incentives. Taxpayers may be able to recover up to 30% of the cost of installation, with advantages varied by state. It may be feasible to acquire a solar house installation with no out-of-pocket fees in some cases. It may take some time to conduct the necessary study, but it is achievable.


While the cost of energy continues to rise, the cost of solar continues to plummet. Solar is currently more affordable than it has ever been in fact, the cost has dropped by more than 70% in the last decade. Solar is now more affordable than ever before, making it available to a wider range of homes.


When you take advantage of solar incentives, installing solar may be even more affordable. Installing a solar system before the end of 2022, for example, may qualify you for a 26 percent federal tax credit. This tax credit is worth 26% of the total cost of your solar system and is applied to your federal income taxes. There are numerous more solar incentives available locally, in addition to the federal tax credit.

 

  • You have insurance against increasing energy expenses


Most households are aware that the cost of power continues to rise. Electricity prices have risen gradually over the last ten years, with an average annual increase of $0.2. Electricity prices will continue to climb in the future, which means your energy bill will rise as well.


Solar panels shield you from the growing expense of power. You don’t have to buy that pricey electricity from your utility since you produce your own energy. As a result, growing electric prices are no longer a concern! In fact when it comes to solar, increased prices may be a positive thing.


Assume your utility charges you 12 cents per kilowatt hour of power. That implies your utility would pay you 12 cents every kWh of extra power your solar panels create and transfer to the grid if you used net metering.


If your utility raises the price of electricity to 13 cents per kilowatt hour, the power you transmit to the system will be worth 13 cents as well. As a result, each time your utility raises their pricing, net metering saves you more money!

 

  • You can be energy independent 


Unlike coal and natural gas, the sun is a limitless source of energy, and solar panels can be erected almost everywhere. The panels’ electrical energy production is determined by their exposure to direct sunlight; anything that prevents this diminishes the output. Solar panels enable you to minimize your reliance on foreign oil and fossil fuels, resulting in a more consistent and predictable energy cost, particularly during peak demand periods.

 

  • You can reduce the carbon footprint 


Solar energy may create electricity without emitting any harmful pollutants. While the infrastructure for creating and transporting solar panels has a carbon footprint, the electricity provided by solar panels is clean and pollutant-free, and it produces no greenhouse emissions. Every year, the average American household emits 14,920 pounds of carbon dioxide. You can lower your carbon footprint by more than 3,000 pounds per year by adding solar panels.


Solar is also attractive since it is a renewable energy source. This implies that while you consume the resource, the source does not become depleted. As a result, humans do not deplete the sun’s energy by converting sunlight that strikes the ground into electricity.


Furthermore, power generated by solar panels produces no greenhouse gas emissions. When we use solar panels to generate power, nothing is emitted into the environment. Clean energy is the only thing that is generated!

 

  • Solar panels are durable 


The majority of systems endure for 20 years or more. Solar panels and equipment require little maintenance at this period. The business you hire can assist you in determining what maintenance is necessary. Because dirt and dust may dramatically impair production, several companies offer self-cleaning devices for their panels. Furthermore, because solar energy technology is always developing, the same size solar panels from last year are now even better.

Also checkout this article on mistakes to avoid while buying first home.


Cons of getting solar panels to your home 


When contemplating about building a solar energy system, keep in mind that there are pros and downsides to consider. The following are some of the drawbacks of solar energy systems:

 

  • High start-up costs


While a lower power bill is appealing, the equipment, panels, and installation expenses might total more than $20,000. A transformer is required if direct-current devices are powered by alternating-current sources. However, because these transformers aren’t 100 percent efficient, the operational cost of an AC solar panel is greater than that of a DC solar panel.

 

  • Dependence on the weather


The sun is the most significant component of solar panels. If you reside in a location where overcast days are common for a lengthy period of time, the system will suffer. In the winter, your system is likely to be less productive than in the summer.

 

  • Not the best solution if you relocate 


In practice, it’s virtually hard to relocate a solar energy system after it’s been placed on a home or company. It is theoretically feasible to relocate PV solar panels while moving into a new home, however this is rarely recommended. The system would have to be removed from your roof and installed to your new home, causing significant damage to both your panels and your roof. Because solar panels improve the value of your home, you should be able to recoup the majority of your investment if you leave your solar panel system to the future owners.

 

  • There can be limitations based on your surroundings 


Most solar energy firms serve a certain geographic region or perhaps just one state as the solar energy industry continues to develop and provide more countrywide services. As a result, if you reside outside of a solar energy company’s service region, you may have trouble discovering solar solutions in your area.

 

  • Inconvenience in crowded regions such as cities and other congested areas


Solar panels may be troublesome in inner cities and other regions with limited space since they demand a reasonable amount of room to install the equipment and have everything function well. For every 1 kW of traditional solar panels, around 100 square feet of roof area is required. If you have a tiny roof or a limited amount of space, you may not be able to fit all of the solar panels required to power your complete home. Also Forbes published an article highlighting dark side of solar panels.


Final words 

Many of the benefits and drawbacks of solar panel installation appear to be negotiable. Solar panel technology is always evolving; therefore, it is far from ideal. You will get a return on your investment, but it will take time. Solar energy, on the other hand, is abundant, clean, and renewable, and its carbon impact is a one-time event – a solar power system will cut carbon emissions for years to come.


After you’ve figured out how solar panels operate and what makes the greatest solar panels, you’ll need to speak with a solar energy firm to determine which option is ideal for your house and environment. Depending on where you reside, you may be eligible for government subsidies and tax breaks to help offset the high upfront costs of installing a solar energy system. It’s generally a good idea to employ a skilled electrical engineering specialist to check over the system you chose to preserve your investment.

We answer your questions on investing in pre-construction condos vs resale condos in Toronto, Canada so you maximize your ROI and make a smart investment.

Making the Smart Decision When Investing in Pre-Construction Condos Vs Resale Condos

There are so many options when it comes to investing in real estate but one of the questions we get asked the most is, “What is the best investment when it comes to Toronto pre-construction condos versus re-sale condos?”
The real estate market is always in flux and this can make investing exciting, but it can also make it extremely difficult for investors. The market can change week to week as much as it can change year-over-year and the re-sale or pre-construction Toronto condo market your watching is probably in flux too.
We’ve all witnessed this first-hand at the beginning of 2022. As both a Toronto pre-construction real estate agent and a re-sale agent I can help you prepare for every type of curveball the market sends our way.
As experts in our field, we’re constantly tracking the active market and are adjusting our strategies in order to earn our clients the best returns possible. By monitoring trends and pricing in all areas and on all products, we are finding the best investment opportunities based on the market at the time.
Over the past few years we’ve been strong advocates for investing in Toronto’s pre-construction condo market but as pre-construction prices creep up beyond their resale counterparts due to increased land, labour, and material costs — not all pre-construction developments in Toronto make for good investments. This doesn’t mean there aren’t great pre-construction investments in Toronto, there definitely are, it simply means that it’s not the only option when it comes to making a good ROI when investing in Toronto real estate.
There are a number of advantages to investing in the resale condo market, let’s cover our top reasons why you should consider resale investment opportunities in the Toronto market.
First off, let’s address a couple of myths.
MYTH #1
Buying a Toronto Pre-Construction Condo is Cheaper than a Resale
It was only a handful of years ago that your pre-construction condo investment was almost always priced below resale counterparts, which is why the pre-construction condo vs resale condo market earned such a good reputation among investors. But today, with a growing number of pre-construction investment condos being built—especially in Toronto—the cost to build is more expensive. It’s a simple case of supply and demand and pre-construction pricing is fast out-pacing its re-sale counterpart.
StatsCan published there year-over-year growth in construction costs, which is at an all-time high for residential construction at 21.7%. Toronto is a victim of its own success as the price of land, material and labour have all increased for developers and they, too, need to make a profit from their investment and need to price projects accordingly.
It’s important that your Realtor is always looking for the best investment opportunities—whether that’s resale or pre-construction—with the best profit margins and this will vary depending on the area and the state of the market.
MYTH #2
Investing in a Pre-Construction Condo Guarantees a Higher ROI
As we mentioned above, in the past, pre-construction investment condos have almost always been priced below their resale counterparts but as of late, these pre-sale condo prices have become, in many instances, too aggressive and many are unjustifiable in the current market. There are many pre-construction opportunities that are priced high because they’re iconic and/or one-of-a-kind. We call these “status” condos, which is like buying a luxury brand name simply for the bragging rights. These do not make good investments.
If you’re over-paying for the product you lose the inherent advantage that pre-construction offers: equity gained during the holding period. Your real estate broker should be your advisor in navigating the good investments from the bad.
MYTH #3
The Best Pre-Construction Deals Always Sell Out in a Day
Consumers are getting fooled by the hype around any hot new projects in a great location and are quick to pull the trigger by putting their money into them. Most new construction condo developments are actually charging more per square foot than resale is trading for in the same area. The lack of education for some investors could lead them to overpaying.
As builders continue to command high prices the trend will continue as there are always going to be buyers that will pay the price. This is specifically true for end-users who intend to live in the building long-term. This is why it’s so important to work with a pre-construction real estate agent that you know is looking out for your best interests and who will tell you whether they believe in the project or not. Frankly, I won’t sell anything I wouldn’t buy myself.
WHO CAN INVEST IN RESALE
If you meet these three major qualifications you’re likely a good candidate for resale investing.
  • You have a 20%+ down payment ready to go.
  • You can qualify for a mortgage today.
  • You don’t mind being a landlord for an extended period of time.
FINDING THE RIGHT INVESTMENT FOR YOU
There are a number of factors that come to play when deciding which investment is for you. If you meet the above qualifications resale might just be the right one.
I say might because I always recommend that if you’re thinking of investing that you book a call with me to discuss your unique situation and goals. The market is always changing and my recommendations will always change with it.
It’s important to find a property that is priced well and in the right location with good market growth potential. This means it matters what you’re buying as much as for what price. I’ll discuss your options at hand and recommend a strategy that will maximize your return whether that’s a pre-construction investment condo or a re-sale investment condo.
WHY RESALE IS A GOOD INVESTMENT
As it stands right now in the market, you may be able to make money faster in resale as the market adjusts. The key is finding the right price; ideally for properties that are equal or less than the pre-construction pricing in the same area. If you can buy a fairly new resale condo with a good floor plan, from a reputable builder, in an area where pre-construction is being built — that new build next door will float your resale investment price up when it comes time to sell.
Let’s say you find a 700sqft resale property that is going for $1000 per square foot compared to the same sized pre-construction property that’s selling for $1300 per square foot.
While you won’t get the same price per square foot as a brand new building when it comes time to sell, if you’ve bought in a reputable building that still sells very well, we can maximize your sale price and achieve a similar price per foot through things like staging. So not only have you purchased for less, but you get to boost your resale value because of the new buildings in the area — not to mention the extra income you’ve earned from renting it out for six years rather than just two.
FINANCING YOUR RESALE CONDO
The difference with resale is that you’ll need to have your financing and deposit monies (20% down) ready on closing, which would be in two to four months rather than pre-construction’s typical 15% down in the first year, followed by the remaining 5% three to four years later. But, if financing isn’t a road block, you have the opportunity to start building equity and earning rental income from your investment right away. Meanwhile, your tenant begins to pay down your mortgage today.
WHO CAN INVEST IN PRE-CONSTRUCTION CONDOS
Below are factors that indicate if you are a good candidate for a pre-construction condo investment.
  • You have a 15% down payment available or you already have equity in a property
  • You can save enough over three years to qualify for a mortgage
  • You’re willing to be a landlord when the building takes occupancy
WHEN PRE-CONSTRUCTION IS A GOOD INVESTMENT
When it comes to re-sale or pre-construction there is no clear-cut answer but when it comes to making a good investment in the Toronto pre-construction market, there are certain factors that contribute to higher returns. This is where working with a pre-construction real estate agent who’s well versed in pre-construction is invaluable.
When it comes to finding a good quality pre-construction investment, their ability to know which builders are reputable and which layouts will rent (and later sell) for a premium are huge in choosing a good investment.
Having the foresight and ability to recognize which neighbourhoods are expected to take off over the next few years can help you to find opportunities that may even have profit built in on signing. If a new condo is being added to an area where inventory is low and is expected to remain low, those deals hold promise as they’re likely to be priced lower than those in areas with lots of inventory but will likely see quick market growth in the years to come.
PAYING DOWN YOUR MORTGAGE PRINCIPAL
One of the major benefits of purchasing real estate investments, both new construction and resale, is that your tenant begins
to pay down your mortgage principal today. Rents in Toronto are continuing to climb and, as of 2019, new condos are exempt from rent control. Couple this with equity gains and you have yourself a healthy investment!
WHEN PRE-CONSTRUCTION IS A GOOD INVESTMENT
Remember, real estate is a long-term investment, you should always try to hold your pre-construction condo investment. If your goal is equity gains — whether resale or pre-construction — expect to hold your property for at least six or seven years. This will protect your investment and allow enough time to generate a healthy return — especially in Toronto’s high performing condo market. New build condos will boost resale values of their neighbouring buildings, provided you buy the right product.
If you’re looking to make money quick and are thinking of flipping pre-construction condos in Toronto you’ll want to check out this article we wrote.
A lot more to this conversation and a lot of moving parts to consider. This is why we always recommend speaking to a Realtor who is well versed in the Toronto market and who regularly invests their own money in real estate.
If you’d like to discuss investment opportunities tailored to your unique situation, book a call today.

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