should we get home warranty

Question

Hi BP,

Is it advisable to get a home warranty for older rental property  (built around the 1940s) ?

Any recommendations in Ohio?

Remington Lyman · Answer

I don't personally use them, but I have some clients who swear by them. They've figured out how to take advantage of the warranty policies to benefit themselves. For me, it's not worth the time to save just a few hundred dollars by leveraging these policies.

Danny Gonzalez · Answer

@Sharad Bagri  As mentioned above, home warranties often aren’t as beneficial as they seem. In our experience as a property management company, we allow owners to use home warranties, but they are required to coordinate directly with the warranty company themselves.

The main issue we’ve seen is that home warranties can significantly delay even simple repairs. This often leads to frustrated tenants, and unhappy tenants rarely stay long. Frequent turnovers can quickly eat into your profits.

Instead, I’d recommend building up a solid reserve fund and addressing work orders promptly. This approach not only keeps tenants happy but also helps you maintain long-term cash flow by reducing turnover costs. In the end, it’s usually more profitable than relying on a home warranty.

Bill B. · Answer

It’s been asked monthly, if not weekly. You can click on the magnifying glass in the upper corner to see the last 2000 posts.

TLDR: Bad idea for your personal home. Horrible idea for a rental. They want you to wait a few days to send someone out to look at it then come back in a few days to try part #1. A few days later part #2, etc. Then you pay your deductible. After you paid for a hotel for your tenants for the last week while the ac, the heat or the water heater was broken.  The warranty company is the money making business. So short of buying it when you know something is failing it’s going to cost more than not having one.

The ONLY warranty I’ve ever found to be worth anything are the $5/mo warranties through utility companies. They are money losers paid for by the utility rates.

Sarah Brown · Answer

Thats the big N.O. for a rental property.  I also don't use them on my personal, but that personal choice.  I like to be able to decide how I want to fix things and not a contractor that I have to hire becuase the warranty company says I do.

Jimmy Lieu · Answer

Hi Sharad, I'd actually advise against a home warranty. These warranties often turn out to be more hassle than they're worth. You'll likely pay high premiums, face lots of claim denials due to "pre-existing conditions", and deal with service delays. You'd be better off building a solid emergency fund and developing relationships with reliable local GCs. Happy to connect and answer any other questions you may have.

Benjamin Aaker · Answer

Home warranties are basically like insurance for the house systems and appliances. As with any insurance you need to weigh the cost of doing the repair yourself vs the cost of the premium payments. If you have the reserves to pay yourself, I recommend to not purchase the warranty.

The house's age isn't so important as the age of the systems in the house. The warranty price will go up as the units are older.

Check the contract. They might not even cover it if they know it is a rental. I don't get warranties for my rentals.

Austin Steed · Answer

I've never liked them personally. When I first started I purchased them and when it came time to use it the process was a nightmare. Wish I would have just saved the money!

Matthew Crivelli · Answer

Home warranties are similar to auto repair warranties. You sign a drawn out contract that gives the warranty company a long lists of outs and exclusions. The name of the game is collect monthly premiums and payout as little as possible. This should be avoided.

should we get home warranty

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