Home Warranty to Keep Repair Cost Low

9 Replies

Just wondering if anyone else keeps home warranties on their rental properties in order to keep repair cost to a minimum. Between appliances going out, minor plumbing issues, etc; paying a monthly premium and a $75 deductible when a problem arises has been well worth the money for me over the last few years. Anyone else factor in home warranties into their investment strategy? If so, how do you feel it compares to the standard percentages for planned repairs and/or capital expenditures? 

Walt

Yes. It's a good idea. I put it in my lease that tenants pay for the trip charge.
Every single time I have had one in place it has paid for itself. Well worth it

Maybe on SFR's but I've tried it on MF and it was a huge waste of money for a year and a half before the owner agreed that we needed to get rid of the warranty company.

I have cash reserves as an insurance policy.  Paying for a warranty is essentially paying for repairs + administrative costs + marketing costs + profit for the company offering the warranty. It simply spreads those costs out via a premium.

In general, insurance is for events that you can't self-insure through.  I'd hope most landlords could self-insure through repairs not caused by a catastrophic event...which, if that's the case, is what property insurance is for.

We have SFH Rentals and now use Select Home Warranty which approx. $350 for the year and $45 a call.

Were were using HMS Home Warranty but there service wasn't the best and they charged $75 per trip and $500 year. 

Definitely worth the money in our opinion. We definitely factor it into our strategy, it is pretty much mandatory for SFH investment model here in Georgia & Louisiana.

My title company gives me a year of coverage for free when I close.  Otherwise, it's a waste of money. 

it is interesting to see the differences of opinion on this. For those that do not keep a home warranty, how much cash reserves do you maintain for each of your properties? Have you ran the numbers and determined your premiums would cost you more?  I suppose that could vary depending on the warranty specification, age of the home, etc etc.

Originally posted by @Walter Key :

it is interesting to see the differences of opinion on this. For those that do not keep a home warranty, how much cash reserves do you maintain for each of your properties? Have you ran the numbers and determined your premiums would cost you more?  I suppose that could vary depending on the warranty specification, age of the home, etc etc.

 If the premiums cost less than the repairs, the insurance company would go out of business. I maintain about $1200-$1500 in reserves per property, and I own enough properties that those reserves are ample, as I can use that pool of money for any repairs across the portfolio.

I have found that HW work well in my rent to own sfr. I have the tenants pay for most or all of the maintenance on the property while they are renting and provide a HW. It gives them a sense of ownership of the property while they are renting and essentially puts that property on auto pilot for me until they purchase it.

For my rental properties i use a $2000 reserve per unit.    

Steven St.Pierre, Maine Investment Group LLC | [email protected] | 2076130903 | http://maineinvestmentgroup.com