Home Warranty for rentals yes/no?

Question

For those that are buy and hold investors is a warranty a good idea. I recently got a price of $564 annually from 1st American with a $100 service call fee. It covers all major repairs and replacement. Plumbing, electrical heat and AC

Do you think this is a good strategy in generally

And do you think this is a fair price ?

Thanks Pocket pals!

Do you think this is a good strategy in generally

And do you think this is a fair price ?

Thanks Pocket pals!

Bob B. · Answer

@Westton Geer Just check out 1st American reviews and you'll find out they don't cover much, response time isn't very fast and their contractors are sub-par.

Kim Stofan · Answer

Hi @Westton Geer!  Here's my 2 cents... Home Warranties are not worth the money usually.  They have many exclusions.  A lot of policies will not cover existing problems.  The company can deny any claim you make based on the assertion that it was a pre-existing problem.   Most policies will not cover you if they believe you or your tenant have insufficiently maintained the item.  They will use this rationale to deny many claims.  You will still need to pay a service provider fee and will have no say in who your service provider is.  The warranty will also only cover a small portion of the cost.

Terrell Garren · Answer

Agree with @Kim Stofan and @Bob B.  Find good contractors you can trust and pay them immediately.  I have my residents call my plumber, electrician, HVAC etc, directly to schedule the service call. The contractors text me a bill or tell me what the tenant did to cause the problem.  The relationships do take time to develop, then it is just too easy.

Westton Geer · Answer

Thanks for the great feedback!!

Terry Lao · Answer

@Westton Geer

Most home warranty companies offer introductory price for the first year when bought through your RE agent. Comes down to cost vs. benefit. Mines were 4plexs and did the first year in Las Vegas. I found that the AC went down a lot, especially in the summers. For about $800 and $75 service call was more than worth it. One AC service call and repair could run into $300-400. There's also peace of mind.

At least do the first year, and see if worth it to renewal for the second year.

Terry

Home Warranty for rentals yes/no?

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