Buffett and Einstein would agree on solar panel cash returns!

Imagine this conversation:


Warren says to Einstein, “Albert, I look for investments growing at 20%+ a year.”


Albert replies, “Using my “rule of 72 formula, I calculate you double your money every three or four years!”


Warren replies, “How do you think I became one of the richest people in the world?”

Warren Buffett quote: “Investors are always looking for stocks that are going to double in a year or two years- that’s why they want tips. Instead, they should be looking for stocks that are going to go up a more reasonable amount, such as 20% or 25% a year for the next twenty years. That’s where fortunes are made.”

“Einstein’s rule of 72”: if you divide your desired compound rate of return into 72 you get the number of years required for your investment to double. Conversely, if you divide the number of years in which you wish your investment to double into 72 you get the required compound rate of return.”

In our previous Blog: How to Double your net Income by installing Solar Panels, We established that we can create a 15%+ annual cash on cash return on the solar component of our apartment building investment by utilizing Virtual Net Metering,( Installing solar panels, then charging the tenants for their electricity). This return can increase along with electricity rate increases, eventually hitting 20%+ returns yearly for the life of the solar panels.

Number wise, I think Buffett and Einstein would both approve and appreciate the extra returns created by our “solar panels on apartment buildings” investment strategy.

Interesting Einstein story: Einstein wanted a divorce. He could not afford the money Mileva wanted for child support of their two sons. Confident that he would win the Nobel Prize for his 1905 work, he promised her that he would give her the prize money when he won, if she would grant him a divorce. Einstein won the Nobel Prize for his work on the photon (not for relativity theory). He kept his promise and gave all the money to Mileva Maric, holding up his end of the contract. She bought three apartment buildings in Zurich, one for her and one for each son.

If Mileva were alive today, I would like to think she would enjoy the extra return on her investment that net metering would bring, and be delighted to be improving the environment by not burning coal to power her electricity usage.

Steve Nauert

Solar Apartment Buildings! “Maintain a firm grasp of the obvious at all times.”

When Jeff Bezos, founder of Amazon, made this quote, it was my understanding he was referring to selling books over the internet, a new concept at the time. He was looking for a reasonably expensive item relative to size and weight. A book became the obvious thing, and Amazon was born.

A whopping 33% of the U.S. population lives in a rented apartment, and they are paying the electric company every month for their power. What if the landlord could supply their tenant’s electricity needs using solar panels? The landlord could increase the rent from each tenant to cover the solar installations cost, plus some profit. 

I would like to think Jeff Bezos would agree on two points:

1) There is going to be a rush to put solar panels on apartment house rooftops. The internet was the catalyst for Amazon, and Virtual Net Metering, (a method in which one solar power system sends electricity back to the grid, then applies the credits from that energy to each of the units in the building), is the catalyst for solar panels.

 2) Environmentally, this is a way to reduce the carbon footprint of 50 to 100 people per building

When you put solar panels on your own personal rooftop it is to save money, and do right by the environment. When you place solar panels on your apartment building, the tenants pay you for their electricity thru increased rent, and you are producing their electricity inexpensively from your panels. This also increases the value of the building.

The great wealth shift from the utility companies to the landlords is happening. This transfer of wealth will take place as the utility company’s stream of revenues starts shifting to the landlords, the Proverbial Gold Mine. Utility companies need a 20, 30 or 40 year investment payback period, while a “solar landlords” payback is 5 to 7 years.