Valid Home Warranties for Landlords for Old Furnaces

Gerald, your two worries are the whole product, so trust them. Across 236 doors in Memphis, the reason we do not build our plan around a warranty is control of the clock. A no-heat call on a furnace covering four units is an emergency, and a warranty puts their vendor, their approval process, and their cap between you and the fix. Before comparing premiums, get three things in writing: the per-system payout cap, what happens when an old gravity unit cannot be repaired with available parts, and whether you can use your own contractor. Then compare that cap against self-insuring: a reserve plus an HVAC contractor you have already tested on small paid work and who answers in winter. The buffer you actually want is speed plus money. Most warranties only sell you part of the second.

Leo SteinBusiness Member

Property Manager · Orange County, CA · Member since 2025 · 177 posts · 41 votes

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Gerald, with several buildings I'd treat this as a capital reserve problem more than a warranty problem. Most home warranties exclude pre-existing conditions, code upgrades, asbestos work, and ductwork, and they often cap payouts well below what you described. For old gravity furnaces, the swap cost you're worried about (electrical, gas, duct, abatement) is exactly what these contracts tend to exclude. Read the exclusions and per-item caps before paying anything, and ask whether they require their own contractors and how they handle emergency heating calls in winter.

What I've seen work better: have an HVAC contractor you trust inspect both furnaces now, get a written quote for the full replacement so the number is real, and set aside a dedicated reserve per door each month toward it. Replacing one on your schedule in the off season is usually cheaper than an emergency swap in January. Keep the tenant heat obligation in mind too.

Happy to compare notes by message.

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Jaimee LaTorra

Property Manager · Denver, CO · Member since 2026 · 7 posts · 5 votes

+1 to getting the full replacement quoted now so you know the real number.

One thing I'd recommend, ask your insurance agent about an equipment breakdown endorsement on the building policy. It's a different product from a home warranty, usually not very expensive to add, and it's meant for sudden mechanical or electrical failure of things like furnaces and boilers. It won't cover plain old age or wear and tear, so ask exactly what counts as a covered breakdown and whether it pays for code upgrades or just the unit, since that's most of your 15k. I know you said you avoid claims but this is the catastrophic kind you mentioned being ok with.

Also check your gas utility for furnace rebates before anything fails. Those are alot easier to line up on a planned replacement than an emergency one. Not an insurance expert, so have your agent show you the exclusions in writing.

Jim Johnson

Real Estate Agent · Memphis · Member since 2026 · 595 posts · 349 votes

With those older furnaces serving four units each, I'd be concerned about both the coverage limits and how quickly a warranty company could respond if one failed in winter. Especially since much of that $15–20K replacement cost involves more than just the furnace itself. I'd want to see exactly what's covered in writing before paying for a policy. Otherwise, setting that money aside for replacements might give you more control when something goes wrong.

Gerald Ryan

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Member since 2024 · 3 posts · 0 votes

I got two policies normally 40 but on sale for 20 for 2 units, so 40/mo with American Home Shield.

It's not a material amount of money. I can cancel anytime. i can learn about the program for cheap. If i have an issue and i don't trust the system i can just call my own guy in i feel like. I know that might waive my claims but i'm just saying i have this as an option.

It is partly for learning. I can cancel anytime.

She tried to sell me 8- one for each unit.

There was of course a lot of bullsh-t on the phone

anxiety bs

i'm just trying to help bs
asymmetry

Maybe I'll keep it through winter. Heck maybe I'll use it for smaller work but I am not depending on it. call it a learning tax: this is a whole new dimension of things that I have not been acquainted with- but I know a lot of it is bs. Insurance, and related like warranties are all asymmetric zero sum adversarial- friendly marketing funnels and difficult claims. I don't even blame them for needing to profit but there should be a price point at which the bs goes away but we'll see how this goes. Best case I don't use it and I'll cancel it in spring.

Trying to get out of (Heloc) debt, conslidate, stabilize and get out of this city- becoming an absentee landlord because I hate this place. I'm trying to reduce my liability and burden. I like responsibility- if it is rewarding, when I am integrated in a system, community, culture. this is just a compliance culture. Financially- I'm doing alright. In other ways, not so much. I know life is better elsewhere. I've travelled a lot.

Richard F.

Honolulu, HI · Member since 2008 · 3k+ posts · 2k+ votes

Home warranties are just that....warranties for A Home. Not a purpose built multi-unit property. There is, as you mentioned, asbestos containing material, which is a potential serious liability if any tenants have access to the area where this is located, even nearby, such as a laundry room. Often the ductwork also has asbestos sheeting applied at joints within the walls, so you need to be aware.

The bigger issue that no one is mentioning, since it is multi-fam, you must be paying the utilities and gravity furnaces are definitely not efficient, and more than likely, neither is the building...walls, attic/roof. As result, you are paying a fortune for heating bills. Even IF your tenants are paying some flat rate or whatever for the gas, that is money you could be getting for increased rent with a clean, modern, efficient system and a modicum of insulation renewal/installation. Of course, then you likely have to deal with exterior windows and doors too if you have single pane glass, but in the end it would be a solid investment in the property. Lastly, unless you have a completely updated burner/pilot assembly, the old ones are not particularly safe either.

JD MartinBusiness Member

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Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes

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For what you want it for you're wasting your money. I would be shocked if either unit went if you collected fifty cents from the company. They know they're old, you know they're old. You said you'd gladly pay several thousand a year if you thought it would buy you acceptable coverage. Why not just put aside the several thousand a year for the replacement you know is coming, get yourself a decent LOC somewhere, and do them one at a time?

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Jimmy Samaha

Staten Island, NY · Member since 2013 · 99 posts · 36 votes

JD is right. The warranty companies know exactly what a gravity furnace is, and the expensive part of your 15 to 20k is the stuff they exclude anyway, the asbestos, ductwork, gas and code upgrades. At 20 bucks a month I'd treat it the way you said, a cheap lesson, and not count on it for the big one.

What I've seen work with old houses here in NYC is getting the abatement done on your schedule instead of the furnace's. The asbestos on gravity duct is usually a big chunk of that number, and it's what drags out a no heat call in January, because nobody can touch it until it's abated and cleared. If you get that quoted and done in the spring, a furnace dying later becomes a straight swap, a lot closer to the 5k you're comfortable with.

Then do the two furnaces one at a time. Setting aside 600 to 700 a month puts 7 to 8k away a year, so you can fund them without leaning on the HELOC. And when you get to going absentee or selling, a newer system with the abatement paperwork in hand helps a lot. Buyers and inspectors get nervous about old gravity heat.

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Divin KanyamaBusiness Member

Accountant · Seattle, WA · Member since 2025 · 535 posts · 227 votes

@Gerald Ryan I get what you’re trying to do—you’re not looking to insure every small repair, just soften the hit if one of these older systems turns into a $15K–$20K emergency.

My concern is that a typical home warranty may exclude the exact costs that make this replacement expensive: multifamily use, obsolete equipment, code upgrades, asbestos, ductwork, electrical work, or anything above a modest system cap. Before buying one, I’d get the actual contract and written confirmation that the building and furnaces qualify, along with the payout limit, response time, contractor rules, and cash-out option.

I’d also have an HVAC contractor who knows gravity systems inspect both units now, identify any hard-to-find parts, and give you a realistic replacement scope. Personally, I’d feel safer combining a dedicated reserve, available line of credit, trusted HVAC contact, and temporary-heat plan. You could also ask a commercial-insurance broker about equipment-breakdown coverage, although age and normal wear may still be excluded.

If several years of premiums get close to the likely benefit, self-funding may give you more control. In your situation, fast and dependable heat for the tenants matters more than simply having a warranty on paper.

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Matthew MorrowBusiness Member

Investor · PA - NY - NJ · Member since 2019 · 775 posts · 266 votes

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@Gerald Ryan Leo's got it. I'd treat those furnaces as a capex line, not a warranty question. Old gravity systems are exactly what warranty companies write around, so you'd likely be paying for coverage that won't pay out when it matters. Get an HVAC tech to look at both, have them cleaned and checked every year, and start setting money aside now so the replacement is a planned project and not a January emergency. Hope some of that is useful.

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Marcus Auerbach

Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes

+1 on capex.

You are being cheap and frankly unprofessional for not replacing systems that have worked past their design life. Your choice is to plan the replacement and get the best quote or you wait until you have a heat-out emergency in January and then pay double.

Clever Mukori

Member since 2026 · 28 posts · 9 votes

Read the "not covered" list before you look at the price. Home warranties often cap HVAC payouts well below a full replacement and exclude code upgrades, ductwork changes and asbestos, which is exactly the expensive part you're worried about.

What a lot of owners in your spot do instead is set aside a dedicated reserve for those two furnaces and get a quote now from an HVAC contractor who has done gravity-to-forced-air conversions. That way the emergency becomes a known number with a known crew, instead of a scramble on the coldest night of the year.

Addy Chupa

Developer · Member since 2024 · 48 posts · 14 votes

I'd be cautious about expecting a home warranty to cover this. The costs you're worried about are usually the ones they exclude. Most plans cap what they pay per item, often in the low thousands for HVAC, and they commonly exclude code upgrades, permits, ductwork changes, venting, and asbestos removal. On an old gravity furnace, that's most of the $15K. Read the sample contract, not the brochure, before you buy one.

A few options that may fit your situation better:

1. Get the real number now. Have an HVAC contractor quote a full replacement for each furnace, and get asbestos testing done on the ducts and furnace. Then you know if it's $12K or $20K, and you're planning around facts.

2. Self-insure on purpose. Instead of paying a few thousand a year in premiums, put that same money into a separate reserve for this building. In a few years you'll have most of a replacement saved, and you keep it if nothing breaks.

3. Replace on your timeline, not in an emergency. If one is near the end of its life, replacing it in spring or fall lets you get several bids, schedule the abatement properly, and check for utility or state rebates. Emergency replacements in January usually cost more and give you fewer choices.

4. Ask your insurance agent about equipment breakdown coverage. Some landlord or commercial policies offer it as an add-on. It usually covers sudden mechanical failure, not wear and tear, so check the wording, but it's worth one phone call.

5. Have a backup plan for a winter failure. Know which contractor you'd call and have a plan to keep tenants warm while the work gets done.

If you can handle $15K to $20K without real damage, a planned reserve plus a proactive replacement schedule is usually cheaper than paying for coverage that may not pay out.

Daniel Jung

Member since 2026 · 49 posts · 17 votes

Since you already bought the policies cheaply, treat this winter as a controlled test, but protect yourself first. Get your own HVAC tech to inspect both furnaces now and keep the written report, photos and service records. If a claim comes, that paperwork is your defense against a pre-existing condition or lack of maintenance denial. Second, never let their dispatch timeline decide how long tenants sit without heat. If a furnace dies in January, restore heat with your own contractor and treat any warranty payout as a bonus, not the plan. Keep building the replacement reserve either way, and set a spring date to judge the experiment: what it actually paid versus premiums and fees. If the answer is near zero, cancel with data, not regret.

Simon W.Business Member

Real Estate Consultant · Lehigh Valley PA & New York City · Member since 2013 · 1k+ posts · 681 votes

2d

Everyone's covered the reserve versus warranty question, so I'll add what it looks like on the tax side, since nobody mentioned it.

The $40 a month warranty is $480 a year, and that's generally a normal operating expense on the rental in the year you pay it. So the "learning tax" is partly offset by the deduction.

The reserve is different. Setting aside $650 a month, which is about $7,800 a year like Jimmy said, isn't deductible when you move the money. You deduct when you actually pay the contractor. So saving for two years doesn't smooth your taxes, it just means the deduction lands all in one year.

Then the replacement itself usually splits. On an $18,000 job, swapping the furnace in place may be a repair, while asbestos abatement, new ductwork, and gas or electrical upgrades are often capitalized and depreciated over 27.5 years. Have the contractor invoice those pieces separately, because it makes the books way cleaner. Jaimee's equipment breakdown endorsement premium would be deductible the same way as the warranty.

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