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Julia Hagen
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Just spent $7,000 on home warranties..?? 😫😳

Julia Hagen
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  • Lodi, CA
Posted Feb 25 2024, 22:04

I have a daughter in college with a 4yr tuition bill that will total $120,000 plus. So, while money is tight I thought it would be a good idea to purchase home warranties for our 3 homes (10 individual units in total because of attached granny units and subdividing).  So, I paid $7,000 cash for 6 yrs of full coverage on each home from Home Choice. (🤯😱🤬)

But, it’s been a total nightmare. I was hoping that we could continue investing this way because we wouldn’t have to worry about big, unexpected costs while dealing w/tuition.  What should I do now? Get a refund? Switch warrenty companies?  Is it advisable to purchase home warranties on rentals? 

Note:                                                                       - Roofs are all OK
- Two furnaces will need replacing w/in 5-8 yrs.                                                              - Interior/exteriors are OK (new carpet and paint eventually, in one home)                             - About 5 appliances will probably need replacing w/in next 5 -10 yrs

Thank you!!

PS

Some shots from a few of our units 🤗

Garage StudioNewest HomeCollage of photos from biggest rentalWalk in closet we converted into kitchen in master bedroom to studio conversion, newest homeBathroom in master bedroom we just converted into a studio, newest home

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Bruce Woodruff
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Bruce Woodruff
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Replied Mar 17 2024, 08:07
Quote from @Scott Mac:

Well for only $200 more you could have bought her a Red Convertible Porsche 911.

$120k to a school.

$7k to an insurance outfit.

Hopefully she gets more  benefit out of this major purchase than the many others who have not.

Just my 2 cents.

I have to weigh in here and echo what @Scott Mac is saying. Are you positive, @Julia Hagen that you want to dump $120k on college education? I'm a little older than you, but I have seen only a couple of instances (out of so many) where the kid came out of college and actually used their degree for anything remotely productive. Have you run a spreadsheet and checked the actual numbers? What is your ROI? How about CoC?

You could use that money to buy properties and teach the young lady how to manage them.....Just my $0.02

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Replied Mar 17 2024, 08:27

Appliances are simple to install and repair. A contractors license to service appliances is not required so labor is a lot cheaper. It also depends on the warranty company and your policy. HVAC is  complicated and in most cases if your compressor goes out or your system is R-22 and has a leak the entire system will need to be replaced. The warranty company will only pay a small labor allowance to replace the failed part or unit. Example, Labor to install provided condenser $250. All other fees such as duct modifications, code upgrades, labor and materials ect, ect, are not covered. Again it depends on your warranty company and policy. I would recommend purchasing a warranty if you have old appliances but be sure to read the fine print when it comes to non covered charges. 

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David Avery
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David Avery
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Replied Mar 17 2024, 09:38

Home Warranty =Big Scam

Get a reliable Contractor in your  pocket. 

Your properties are very nice and classy. 

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Selina Banda
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Selina Banda
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Replied Mar 17 2024, 09:42

@Kevin Sobilo

You are right. I canceled the policies. When you need the services, most of the times, they will assign a company which will not show up or call you that they will not come. It's a headache.

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Christie Gahan
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Christie Gahan
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Replied Mar 17 2024, 10:28
Quote from @Kevin Sobilo:
Quote from @Scott Mac:

Well for only $200 more you could have bought her a Red Convertible Porsche 911.

$120k to a school.

$7k to an insurance outfit.

Hopefully she gets more  benefit out of this major purchase than the many others who have not.

Just my 2 cents.


Or that $120k could have been the down payment on maybe 5 duplexes in a cash-flowing market providing the child a basic income for life!

 Be nice!  This lady came on here to ask some questions not have you pass judgement on her family life.

Scott Trench had a blog post recently that over their life time, college grads still out earn those with a high school diploma.  They make $2 mil more over their life time.  

As for the Porsche, how long does it take for that to lose $7k in value?  

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Christie Gahan
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Christie Gahan
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Replied Mar 17 2024, 10:58
Quote from @Bruce Woodruff:
Quote from @Scott Mac:

Well for only $200 more you could have bought her a Red Convertible Porsche 911.

$120k to a school.

$7k to an insurance outfit.

Hopefully she gets more  benefit out of this major purchase than the many others who have not.

Just my 2 cents.

I have to weigh in here and echo what @Scott Mac is saying. Are you positive, @Julia Hagen that you want to dump $120k on college education? I'm a little older than you, but I have seen only a couple of instances (out of so many) where the kid came out of college and actually used their degree for anything remotely productive. Have you run a spreadsheet and checked the actual numbers? What is your ROI? How about CoC?

You could use that money to buy properties and teach the young lady how to manage them.....Just my $0.02

@Bruce Woodruff ... I had a quick trip to the ER last week.  I'm quite glad all those young people went to college.  We are communicating via technology that was created by college grads.  I value my CPA and lawyer because the education and experience guides me to make better financial decisions.  
  I'm a parent of college age kids.  It is much harder for them to pick a good path for education and career because of the costs.  I really think we shouldn't expect them to go to college until they are 25.  At 18, they have never done anything besides go to school and they have no idea what they want to do or what anything costs.  When I was there age, you went to college to figure it out.  Now they have to figure it out before they go.  
 

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Jessie Dillon
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Jessie Dillon
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Replied Mar 17 2024, 11:03

i bought a home warranty once and never would again. they rarely have things taken care of in a timely manner, which can be fine for your primary in some cases, but not for a rental. and the companies they contract to do the work, are getting paid pennies on the dollar for those jobs based on the deal they negotiated, so they're in NO rush to get out to you. and like any insurance company, they do all they can to get out of stuff. it was a waste of not only money, but also time and energy.

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Christie Gahan
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Christie Gahan
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Replied Mar 17 2024, 11:08
Quote from @Bruce Woodruff:

Well I never thought I would be the one saying something like this......but I have a recent good news story about a warranty company.

Based on an experience over 30 years ago, I have been on the anti-warranty bandwagon and even run them down on this forum, but:

I bought a house last summer (primary home) and the sellers agent threw in a Home Warranty. I ignored it figuring it was just BS. 

#1 - Then the cooktop starting acting up and I figured, hey why not call and give them a chance? Imagine my surprise when a guy showed up promptly, said he couldn't get parts for the Jenn Air model any longer (18 yrs old), and few days later I get an email from the warranty company offering me a replacement cooktop that was far more expensive than an exact replacement! Of course I said yes and the tech returned and installed the new cooktop. I was blown away to be honest, I was expecting a run-around....

#2 - A month later the dishwasher starting leaking. The tech tried replacing the door seal, and it still had a very slight leak, so he recommended a new one to the company. A week later I had a brand new DW. Once again, they did not go cheap...they could have spent $400 ish dollars to buy me a cheap DQ (I still expected as much) but they offered $1500 as a top limit and said go ahead and pick a new one! Once again, a brand new high-end (GE Profile model) DW

#3 - One of the water heaters went out and within a couple days it was fixed (new thermostat)

My co-pay was $85 each for all three of the above.....for about $3000+ worth of product and labor. I'll take that deal all day long. I'm not sure how they make any profit to be honest... :-)

I plan on renewing the plan when it expires in July. One of the smartest financial moves I've every made, Lol.... The AC condensers are both 18 years old so they can be expected to pass on in the next few years.

@Julia Hagen Be aware though that they will not just buy you a new unit. Their first effort (of course) is to attempt a repair. But at least those company will quickly shift their focus to new without hassling you for months.

So my final take is that - IF you get the right company, a warranty plan is actually a smart financial move - and I never thought I'd be the one saying that!

I have not disclosed the name of the company on here to avoid the appearance of impropriety :-)


 I have a friend that had a similar experience purchasing a high end older home.  All the appliances were original and they all quit working the first year.  She ended up with a kitchen full of new KitchenAid appliances ( the orig brand).  So, happy endings every now and then.  The last house I bought came with a home warranty.  The fine print states the exceptions.  A new furnace is capped at $2k.  

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Mike K.
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Mike K.
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Replied Mar 17 2024, 11:28
Quote from @Glen Wiley:

I have never heard anyone have a good long term outcome from home warranties. I ignore them when sellers want to include them in closing terms for houses we buy.

This may have been tuition in the school of real estate investing.


 You have to know how to play the game to come out ahead.  The contractors they send out are not making a lot of money unless it is a major repair, so they are biased towards replacing the water heater (or whatever) instead of fixing it.  Guy who came out to my house did not even try to clean the flame sensor. He did no testing whatsoever, didn't even remove the heat shield on the water heater. All he did is say, I think it's the regulator, and that part is no longer available, so you need a replacement. He gets paid to come back out and install the new water heater.I would imagine some of these contractors are open to "an arrangement" to replace the furnace instead of repairing it. Get my drift?

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Mike K.
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Mike K.
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Replied Mar 17 2024, 11:31

If you have a 9 year old furnace it's time to get the home warranty as they only last 10-15 years nowadays.  The days of the 40 year old furnace are long gone. Once your furnace gets replaced by the home warranty it's time to drop your coverage, before they raise your premium.  Rinse and Repeat.

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Bruce Woodruff
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Bruce Woodruff
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Replied Mar 17 2024, 11:35
Quote from @Christie Gahan:
Be nice!  This lady came on here to ask some questions not have you pass judgement on her family life.

Scott Trench had a blog post recently that over their life time, college grads still out earn those with a high school diploma.  They make $2 mil more over their life time.  

People come on here for advice, and they get it. It is a very fair question to ask since we're doling out financial advise, right? We have discussed the college vs non-college thing ad infinitum. The studies are completely flawed. They compare all college grads to all non-college grads, which would include the poorest of the poor, the inner-city and Appalachian kids who have nothing vs middle and upper middle class kids. Apples and oranges.

And we were very nice....just offering an alternative.... :-)

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Replied Mar 17 2024, 13:01

Home warranty companies exist to make money on statistics.  The way they ensure the statistics are correct is by having standards for which they follow when claims are made.  A financially wise landlord has standards about how they take care of their property, to avoid losing money.  The same applies to a home warranty company.  For many, the cost exceeds it's worth, statistically.  For others, in the short term, it saves them money, IF enough claims save them money they'd otherwise have to come up with.  When a seller provides a home warranty- why not!  They're paying for it!  Read the fine print.  One of mine had a 30 day grace period.  I did not pay close enough attention and made a claim just inside the limit.  I ended up paying for the entire service AFTER the warranty company called a repair shop and then the repair shop sent them the repair info.  Note:  the warranty company followed my directions without question and THEN informed me they were not responsible for covering repairs AFTER they charged me the deductible.

In some scenarios (other source covers the cost of the warranty and you have several covered expensive items) this works.  In others, it's not worth the price.  You definitely need to know and anticipate the limitations ahead of time.

As for college, it serves a purpose, but the customer needs to know the system.  When I was in HS it was pushed on kids as a necessity.  That is not the case.  It is an investment, an investment we need many to make, but not all.  If the cost exceeds the benefit, that must be revealed, and just like buying and selling a home, most of the players are incentivized to keep the product moving, not to do your own due diligence.  I went to college when the investment made sense and it still does for me.  120,000 is a lot of money and the OP is smart for looking at alternatives to just taking out 100% loans.  People need to know the details.  I once listened to a radio listener call, where the listener complained that they'd been paying their student loans for 20 years and the balance hadn't gone down.  Wow...you HAVE to know what's going on there.  They clearly had signed a document that keeps their payments as low as possible (and probably renegotiated and refinanced at least once).  Again, KNOW what's happening with your finances.  The same applies to warranties.  Push for the details, even if the person offering takes a big gulp of air.  

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Mike K.
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Mike K.
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Replied Mar 17 2024, 16:03

My son got accepted to the Ohio State University School of Engineering recently.  $41k per year including housing.  Ohio University gave him a $40k scholarship for a total cost of $17k per year.  Ohio State is the better school, but not a good value. He's going to the 2nd tier school and will still be able to have a good career if he works hard.  I work a 2nd job at night to build up the college fund. I don't want to go into debt to pay for college.

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Andrew Syrios
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Andrew Syrios
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ModeratorReplied Mar 18 2024, 08:29
Quote from @Julia Hagen:

@Andrew Syrios Yes, I agree that a replacement right now would be ideal. However, in the last two years, we've replaced two air conditioning systems, added a window unit to another property, and have two furnace replacements coming up. We are currently working on how we are going to budget for these additional replacements.


 OK I can see what you're talking about. Definitely sounds like something systemic is causing these units to go down as that is a very unusual amount of needed replacements

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Jo-Ann Lapin
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Jo-Ann Lapin
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Replied Mar 18 2024, 08:31

I would discipline myself to self insure . Those policies have all sorts  of limitations .

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Jo-Ann Lapin
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Jo-Ann Lapin
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Replied Mar 18 2024, 08:32

I would discipline myself to self insure . Those policies have all sorts  of limitations .

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Julia Hagen
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Julia Hagen
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Replied Mar 18 2024, 11:25
Quote from @Aaron Cowan:

I own an HVAC company and 99% of my work is for home warranty companies. HWA, Choice and Select. Know this, those companies only provide equipment and do not pay the contractor enough to install it. This leaves the policy holder with that cost. If you need your a/c condenser replaced expect to pay an extra $1200 to $3000 to the contractor. It is about half of what you would pay without the warranty. The only benefit is with simple repairs like motors and other parts. they will cover 100% of that.  

Wow, thank you so much for posting! This is the first time I’ve heard from a legitimate company that is willing to work with my specific home warranty company. May I ask you a question? Most of the people we had come out all complained that Home Choice was so tedious it wasn’t worth their time to deal with them. When we finally found a really great company they flat out refused to work with any home warranty company - leaving it up to us to seek reimbursement. 

Is this true? Regardless of all of the pricing inefficiencies for your time, (and I’m so sorry you have to deal with that, you deserve to be paid for your time!) is it true that they make it nearly impossible to communicate with them directly, over the phone and require tedious amounts of seemingly irrelevant data? 

The first time we called them out to fix our bathroom faucet I got a bad feeling because after waiting eight hours for the plumber, he shows up, stands in the hallway and takes a photograph of the sink and faucet and walks out the front door?!?  

I ran after him to inquire as to whether or not he was actually going to repair the faucet. He said he had to submit the photograph in order to get authorization for the repair?? Does the warranty company actually think I might be lying about having a broken faucet? That I am somehow just making it up and probably have a deal with the repair guy to take the cash and split it or something?  

Because we had Fidelity before we had Home Choice and they actually fixedthings. I’ve always had a home warranty on every owner occupied property we’ve owned and replaced at least one appliance with it. But no one has ever required photographs just to prove the broken unit existed.The plumber did notify us that in our area, Home choice is notorious for being almost impossible to deal with and covering virtually nothing. He said everyone hates working with them. Do you find them to be more difficult than some of the other companies?   

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Replied Mar 18 2024, 12:49

I do strictly HVAC so I'm not sure about plumbing. If your faucet needed to be replaced he would need authorization first. They require pictures of anything that requires replacement. 

These are insurance companies and everything is claim. They are difficult to work with almost impossible to talk to. They wont accept live phone calls from venders so we must wait for them to call us. 

On the good side. My experience with simple repairs like fan motors and standard parts has been good. The repairs are almost always covered, They also must approve all charges to the customers even if those repairs are not covered and will often pick up some of that cost. If your a/c system goes out you will end up paying about half the cost or less. 

I do not have warranty policy's on my small portfolio of rentals because I replace anything that is 10 years old or older and use Lachel to take care of emergency calls.  

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Mike K.
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Mike K.
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Replied Mar 19 2024, 07:33

I have a AHS home warranty and they have been OK to work with.

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Replied Mar 19 2024, 16:31

I am also an HVAC and Plumbing contractor for a couple of home warranty companies. Most of the folks I deal with are happy with them. I think the people that benefit the most are older people that live on fixed incomes and have very old equipment in their home. For these guys if an AC needs a $600 motor replacement that could really set them back. Instead they only pay $75 and are cool again. If you need a full replacement expect to have to pay a couple of thousand but still not a bad deal. As with most extended warranties such as cars, electronics, etc your almost always better off self insuring. 

The reason the plumber needed photos are because they must get approval from the warranty company before working. He will submit the photos and the cost to replace or repair and wait for approval. Their labor rates are way below market rates so don't expect any big name established company to show up.