€25,000 per year

Mirror game

Hi.
Could anyone put a value on this.

A renewable energy company have been approved planning "in principle" to build a solar farm on land I own, they're going to enter a lease agreement with me to rent the land off me for €25,000 a year for the next 25 years, index linked.

They'll have to spend 5 million+ on the project.

I'm entitled to sell this land with the lease on it

Anyone on here know if there would many people interested in buying the land with the lease in place
and
could anyone put a price on this land with a €25,000 a year return, with no cost and no work

I own an applewatch

I would snap their hand off to be honest.

Mirror game

I own an applewatch wrote: »

I would snap their hand off to be honest.

I'm having a solicitor who has experience dealing these type deals look over the lease agreement and if they say it's all good, I'll be signing up for sure. Also, I'm on a fairly low wage so tax wise it should be a good deal for me.
All that said, I can't help but thinking that it's the kinda deal that would be more suited to someone who's retiring and has money to invest.

I own an applewatch

Mirror game wrote: »

I'm having a solicitor who has experience dealing these type deals look over the lease agreement and if they say it's all good, I'll be signing up for sure. Also, I'm on a fairly low wage so tax wise it should be a good deal for me.
All that said, I can't help but thinking that it's the kinda deal that would be more suited to someone who's retiring and has money to invest.

Absolutely it's wise to check out the deal.

Could you not retire happily on 25k if it's for 25 years?

I'm so envious of you right now.

Mirror game

I own an applewatch wrote: »

Could you not retire happily on 25k if it's for 25 years?.

Don't know about "happily" on 25k. The solar company wanted to make it a 40 year deal and 25 years is the shortest they'd agree to. They don't wanna have the rent renegotiated when they've got all the solar panels down.

Senecio

How much land are we talking about and where is it? You need to value the land as is and what's its earning potential in other industries. Then you'll be able to determine whether it's a good deal or not.

J.pilkington

When valuing for your resale option I would imagine it's not as simple as 25*25 plus estimated land value at end.

The solar company is likely new and I'm not sure of how proven their business model is so you would surely have to include an element of discounting in the calc as its possible they could do bankrupt I the early years leaving behind damaged land which needs investment

davo10

Get your solicitor to ensure the solar company fully indemnifies you by providing public liability insurance on the site. Ask to have a copy of the policy forwarded to you each year. As the land owner, you could be liable for any injuries/deaths which occur while people are working/visiting the site.

Also, consider what index you are linking it too, inflation? It might be better to write in a clause whereby rent is reviewed every five years, the land will be worth more to an investor if the investor is able to negotiate any rental increases rather than having it linked to an index which may rise very moderately.

Very few investment properties guarantee a €2k+ return per month with no maitanence particularly, for such a long period so your site will be worth a lot of money to you or too someone else. If it were me and taking into account that it's a distinct possibility that the company may fail, I'd be looking for/looking to pay somewhere around the €70 - €100k mark.

Marcusm

In order to evaluate this properly, you'd have to specify the acreage and the approximate value of the land (agricultural value presumably) and whether there are any special factors - for example development potential.

eeguy

I own an applewatch wrote: »

If someone offered me 25k for 25 years I'd instantly retire. The 'fcuk you' letter to the boss would be in the next post.

Some of us are not materialistic.

Remember you'd get the dole as well. So that's an extra 8k a year or so.

You'd be getting near the average wage for doing SFA.

Bigcheeze

eeguy wrote: »

Remember you'd get the dole as well. So that's an extra 8k a year or so.

You'd be getting near the average wage for doing SFA.

You'd get it for six months and then lose it because you have 25k coming in.

Terrontress

What's 25k going to be worth in 25 years time? Think about what seemed like a good income in 1990 and trying to live on it now.

davo10

Marcusm wrote: »

In order to evaluate this properly, you'd have to specify the acreage and the approximate value of the land (agricultural value presumably) and whether there are any special factors - for example development potential.

If it's for a solar farm, most likely it is in the back of beyonds on the side of a mountain as the company is unlikely to get through the planning stage if it was close to a residential area. Also development land would be worth a hell of a lot more than the amounts the op is talking about.

Bigcheeze

davo10 wrote: »

I'd be looking for/looking to pay somewhere around the €70 - €100k mark.

lol. You'll be writing a long time. You're asking for a 25-35% yield on your investment!

land is worth at least 250k if the energy business is sound. Lots of these energy projects have guaranteed income as there is a State commitment to buy the energy to encourage investment. Having the 40 year lease will make the land more valuable op.

ted1

Without knowing how much land is being talked about, it's hard to tell if it's a good deal.

If it were me and the 25k was reasonable for the amount of land then I'd also look for 2% of revenue/ profit annually and have the 25k linked to inflation.

Solar doesn't require much foundations so there won't be to much disruption to the land.
I'm guessing your in through east and near existing power lines and possibly a sub station.

You should get a good accountant , of the wind farm let you invest say the first 5 years up front , then that 125 would become quite a bit more as the tax liability would be grateful reduced for investing in green energy and you'll get a guaranteed return.

http://www.solar21.ie/the-investment/investment-calculator/
http://www.bvp.ie/eii-scheme/green-eii-fund/

davo10

Bigcheeze wrote: »

lol. You'll be writing a long time. You're asking for a 25-35% yield on your investment!

land is worth at least 250k if the energy business is sound. Lots of these energy projects have guaranteed income as there is a State commitment to buy the energy to encourage investment. Having the 40 year lease will make the land more valuable op.

Bigcheeze wrote: »

lol. You'll be writing a long time. You're asking for a 25-35% yield on your investment!

land is worth at least 250k if the energy business is sound. Lots of these energy projects have guaranteed income as there is a State commitment to buy the energy to encourage investment. Having the 40 year lease will make the land more valuable op.

For the purposes of simplicity, let's say €25k per year for 25 years yields €625k and tax at 40% for a investor leaves €375k and deduct your €250k from that leaves €125k over 25 years or €5k per year. Then you would have to hope that the solar company lasts the 25 years, if they didn't you would be left with land that would probably be worthless to you but worth perhaps a very small amount to someone else.

If you offered me €250k for it if snap your hand off before the village realised you were missing and asked for you back.

Bigcheeze

davo10 wrote: »

For the purposes of simplicity, let's say €25k per year for 25 years yields €625k and tax at 40% for a investor leaves €375k and deduct your €250k from that leaves €125k over 25 years or €5k per year. Then you would have to hope that the solar company lasts the 25 years, if they didn't you would be left with land that would probably be worthless to you but worth perhaps a very small amount to someone else.

If you offered me €250k for it if snap your hand off before the village realised you were missing and asked for you back.

Good man, resort to personal abuse. Not going to engage with your argument.

_Brian

It sounds like a sweet deal and worth investigating.

Ensure there is no clause that the rent is only due when the plant is up and running.

Also can you sublet?? That would be a useful clause as I think you can graze sheep under these solar farms, you could also rent it to a sheep farmer to graze increasing income further. Or maybe that is their idea to somewhat offset the cost of leading the ground.

VincePP

A long term investment fund would look at a 5%-6% return assuming the solar company has a good financial rating.

Ballpark you could sell it for circa € 400,000 - €500,000

Investment fund can be an individual with a pension or one of the larger funds.

If the solar company has an A financial rating (quite possible) then price will be at higher end.

A good commercial estate agent such as savills would give you a very accurate figure as they deal with this type of stuff everyday.

The_Conductor

Bigcheeze- you don't get to accuse another poster of personal abuse and then have a second bite at the cherry reporting their post- if you feel its abusive- allow the moderators to review the post - or refute their posts factually.

Having viewed the thread in its entirety- while I do feel that Dav10 was being deliberately provocative- by using worse case scenarios- I do not in all honesty believe he was being deliberately abusive towards you. He could have been more civil and less sensational in how he phrased the post- however, the point he was making (badly) is valid.

No action proposed- aside from a warning to all posters- to cop on and be civil towards one another- you're not going to get another warning on thread.

machiavellianme

Bigcheeze wrote: »

lol. You'll be writing a long time. You're asking for a 25-35% yield on your investment!

land is worth at least 250k if the energy business is sound. Lots of these energy projects have guaranteed income as there is a State commitment to buy energy to encourage investment. Having the 40 year lease will make the land more valuable op.

Not for solar, there isn't. Nor should there be. Feed in tariffs are to encourage new fledgling technologies to take off. Solar is mature and costs little to install compared to other sources. However, it will require a lot of investment in the distribution system.

I'm guessing this is a 4MW solar farm. It's roughly 5 acres per MW so you'd likely be handing over 20 - 25 acres for 25k per annum. It's an OK deal because you can still graze sheep on the land under the panels but in 10 years time that 25k won't be as lucrative as today.

The_Conductor

Does the land have any other viable use- including the likes of forestry- and how does the current proposal stack up against alternate uses.

Any income from this proposal- is taxable- forestry, and a limited range of other options- might be tax free- or tax efficient- how does this proposal stack up on a net revenue basis......?

The company concerned- what are their credentials?

Have you looked at the industry- and seen whats happening in Germany and the UK (which arguably are more viable as solar farm locations than Ireland). How would the removal of subsidies for solar power generation- as is happening elsewhere- affect the business model? Could you end up with the company being wound up- you with an unenforceable contract- and the land out of commission with panels and high capacity power lines limiting other use, until you got the place cleaned up?

If the benefit of this to you- is you get to sit back and get 25k into your hands annually- with no work involved- are there alternates that might suit your proposed lifestyle (forestry or wind for example).

Are there other solar farms in the area- and have their faced regulatory or planning issues (whatever difficulties wind may have for people- I can only imagine you'd get far more complaints over a solar farm, than you would over a wind farm).

Just how viable is their proposed business model- I'm sorry- from the little research I've done down the years- these type projects tend to based on a premise of abnormally high fees per unit power generated- they do not stack up other than as a subsidised form of power production (even locations like Spain are removing the subsidies- and by god, solar farms are a lot more viable in those sort locatoins- than in Ireland..........) If solar farms are not viable without subsidies in Spain- surely this would have alarm bells ringing in an Irish context?

Personally- I think its a hare-brained idea- I can see why its attractive to you- but as a business model- I don't see how it could possibly work in an Irish context.

I'd explore all the other land use alternates- and critically assess this as a proposal- because it certainly is not as simple as you get 25k into your hand per annum (index linked), sit back and ride into the sunset..........

The_Conductor

Strip unusually generous unit rates from the equation- and see if its still viable.............

machiavellianme

The_Conductor wrote: »

Does the land have any other viable use- including the likes of forestry- and how does the current proposal stack up against alternate uses.

Any income from this proposal- is taxable- forestry, and a limited range of other options- might be tax free- or tax efficient- how does this proposal stack up on a net revenue basis......?

The company concerned- what are their credentials?

Have you looked at the industry- and seen whats happening in Germany and the UK (which arguably are more viable as solar farm locations than Ireland). How would the removal of subsidies for solar power generation- as is happening elsewhere- affect the business model? Could you end up with the company being wound up- you with an unenforceable contract- and the land out of commission with panels and high capacity power lines limiting other use, until you got the place cleaned up?

If the benefit of this to you- is you get to sit back and get 25k into your hands annually- with no work involved- are there alternates that might suit your proposed lifestyle (forestry or wind for example).

Are there other solar farms in the area- and have their faced regulatory or planning issues (whatever difficulties wind may have for people- I can only imagine you'd get far more complaints over a solar farm, than you would over a wind farm).

Just how viable is their proposed business model- I'm sorry- from the little research I've done down the years- these type projects tend to based on a premise of abnormally high fees per unit power generated- they do not stack up other than as a subsidised form of power production (even locations like Spain are removing the subsidies- and by god, solar farms are a lot more viable in those sort locatoins- than in Ireland..........) If solar farms are not viable without subsidies in Spain- surely this would have alarm bells ringing in an Irish context?

Personally- I think its a hare-brained idea- I can see why its attractive to you- but as a business model- I don't see how it could possibly work in an Irish context.

I'd explore all the other land use alternates- and critically assess this as a proposal- because it certainly is not as simple as you get 25k into your hand per annum (index linked), sit back and ride into the sunset..........

A complete fallacy. Solar farms are viable in Spain but the subsidy has been removed since it is no longer required. It was to encourage original growth through research and investment in the industry but was over generous, especially as the cost of providing solar dropped rapidly. There is no large scale solar feed in tariff in Ireland and yet there are tens of farms being proposed weekly. These are viable whether refit applies in future or not from an investment perspective. Pv conversion efficiency drops as the temperature rises. So does the ampacity of the conductors connecting the solar farm to the national grid. A solar farm in Spain suffers more from this than one in Ireland. Yes, there will be more photons incident to the panel in Spain, but more of those that are absorbed in Ireland will be converted to dc electricity. The output of the farm in Ireland isn't as far behind Spain as you would think.

Avatar MIA

I'd ask the company if they would pay more per annum for a 40 year option and if they would pay the last 5 years up front.

I'd agree to index linked payments with the proviso that the minimum payment would be 25k.

I'd also ask for the yearly payment paid in a single amount at the start of each year.

There's no mention about the size of the land, but unless it's somewhere slap bang in the middle of D4 it's likely a good deal.

air

machiavellianme wrote: »

The output of the farm in Ireland isn't as far behind Spain as you would think.

Sorry this is nonsense, the system losses you refer to are indeed about 3% higher in Spain but the overall energy available per m2 is almost double that available in Ireland.
http://re.jrc.ec.europa.eu/pvgis/apps4/pvest.php

machiavellianme

air wrote: »

Sorry this is nonsense, the system losses you refer to are indeed about 3% higher in Spain but the overall energy available per m2 is almost double that available in Ireland.
http://re.jrc.ec.europa.eu/pvgis/apps4/pvest.php

Have you factored in the conversion efficiency of the photovoltaics as it changes with temperature?
Energy produced from 2 identical panels at midday in Italy and Ireland has been shown to be approximately 15% lower in Ireland. Sadly the light intensity profiles weren't included in the report so cloud may have been a factor in Ireland.

air

machiavellianme wrote: »

Have you factored in the conversion efficiency of the photovoltaics as it changes with temperature?
Energy produced from 2 identical panels at midday in Italy and Ireland has been shown to be approximately 15% lower in Ireland. Sadly the light intensity profiles weren't included in the report so cloud may have been a factor in Ireland.

Yes I have, if you take the time to review the link I posted you will see that it includes a figure for PV system losses. These are indeed greater for Spain - by about 3%.
This increased loss is completely negligible in respect of the available solar energy which is approximately double that in Ireland.
I've nothing against PV in Ireland but let's get the facts straight.

davo10

Bigcheeze wrote: »

Good man, resort to personal abuse. Not going to engage with your argument.

Sorry, post not meant as a personal attack, but when you put "lol" in response to another post, you are being disparaging. The jibe as for anyone who would consider the value of the land to be €250k based on the rental income, it would offer less than 2% per annum and the value of the land/your investment would plummet of the company failed or they found that profits did not reach targets. This would be a good investment at the right price but certainly not at €250k.

It's always best to make sure you are on solid ground when you preceed your post with "laugh out loud".

Mirror game

Ok, just have a short time to reply here but will look at thread more later.

It's a 25 acre site 3km from a large town and 500m from esb substation. Its good quality land only about 1.5km from built up area on outskirts of town and about 500m from land zoned residential.

I'm believe that the distance from the substation in a key factor for them as it keeps the connection costs down. Most sub stations only have the capacity for one 25 acre solar farm but some of the newer ones have more, I think.

There is a bond in place, if ever they go bust the panels will be removed.

Solar farm boundary fence is 2.4m and the top of panels are lower, no noise from panels.

sheep or smaller animals hens, geese etc may be allowed, as it is done in uk, but no guarantee as their insurance might not allow it.

I also believe if it all works out the way that they're planning, the amount that I get will only be a tiny % of what they'll be raking in. If I'm selling I'll be waiting until the whole project is up and running and rent coming in, that way it would help remove any potential investor doubt about what will happen down the line.

callaway92

Terrontress wrote: »

What's 25k going to be worth in 25 years time? Think about what seemed like a good income in 1990 and trying to live on it now.

Most important post of the thread.

Lot more to be gained here if you're feeling up for it. Definitely have to have some stipulation where if inflation occurs you will get the extra moneys worth but NOT below 25k. Stake in their business even perhaps??

It isn't as simple as snapping the hand off them anyway imo.