@Robert Gilstrap
@Joni Chin
@Cara Lonsdale
@Mike McCarthy
@Fred Heller
OK sorry for the many tags if any of you are NOT interested in following this, please let me know. I for one have gotten a great deal of value on threads that follow up and provide info over time. So here goes....
About 3 months ago we converted our ENTIRE portfolio (we're at 9 units, with 10 doors - one is a duplex and the rest are SFHs) to a complete Home Warranty - and went with American Home Shield, with supplemental coverage for the main sewer and main water lines offered through Des Moines Water Works (they work through a company called HomeServe). Our 'typical' or 'model' affords some nice cash flow and for the most part we are VERY happy with our tenant mix so I think this may be relevant for our decision justification. I have some friends where they are operating a 'different' rental business where their margins are a lot thinner so that roughly $60/mo added cost per property would not be tenable. Note: the duplex they hit us for the premium on a per unit basis.
So, it's not an insubstantial cost going out the window every month - roughly $500 let's call it. We're 3 months in and have initiated 4 calls (work orders etc) to date.
Here have been our data points, with both financials and some more 'color' on how they've gone:
Early April 2018: First Call in was a Stop Box failure where it failed in the open position and tenant had not been paying Water Bill for entire tenacy. I was disappointed in the responsiveness of DMWW with regards to providing us notice of the situation. It wasn't until 5 months after this all started (and they tried to shut off the tenants' water) that we got a letter letting us know the situation. (by the way, this is our last BAD tenant and he's out now). Anyways, this was a HomeServe call and they initially indicated that they were unsure/doubtful they needed to respond to the situation because it was non-emergency. We had some back and forth about what constitutes an emergency, and she did relent and agree to dispatch someone. The company they dispatched it also mentioned the word emergency and I again had to push back and state our case that it WAS in fact an emergency. They did do it, however, and they did a great and quick job. I don't know how much stop box replacement projects cost and we typically don't pay retail prices for anything. However, there was NO deductible on this and they did a great job. I'm guessing we would have been out $500 and 2 days of my time to manage this project, or average (just got that from an article from Des Moines Register) labor cost of $1183 if we were to do it more 'turnkey'. In either case especially given the timing of this item I'm thrilled with how it went.
Late April 2018: We initiated a call also to HomeServe when we had a severe (nasty) backup with a lateral floor drain on one of our rentals. We aren't sure of the cause but suspect one possibility was a day laborer from Ghana (really nice young man) that just didn't know what was appropriate to go down the toilet. This was during a turn period and we actually let a new tenant for another house stay in the house for a week while we completed updates on their permanent home, when this happened. Again, HomeServe this time on the sewer side, dispatched (with no fighting this time) a Drain type plumber. They came in, did a great job, and we haven't had any more issues. No deductible there. Guessing this would have been a $150-250 type call if going with a Roto Rooter (don't ever hire them by the way) and I can't trust them as far as I can spit so who knows it may have turned into a disastrous main sewer line replacement if my one experience with them was representative...
Early May 2018: Got an AC call on a house owned under an IRA. Called AHS and they dispatched local company. Diagnosis was that the compressor was gone, in the condensing unit. After a couple frustrating conversations with AHS trying to explain the difference between a diagnosis and prognosis (I was frustrated they just wanted to replace the compressor or rather that's all they would pay for - when because this is an R22 unit and older unit, we felt it was about time to replace the coil and condensing unit). As a side note, the 'trump card' for the companies that work through AHS is their crazy markup on refrigerant. AHS only covers $10/lb of this stuff and that gets you like 5% of what these companies charge... At something like 400-500% markup, by the way... Anyways, we had to learn a bit more about AHS's process and we learned you can request what's called a cash in lieu amount. The catch is that they apparently want to 'kind of' stay involved in the project at least in terms of verifying something was done and they have communicated they want someone licensed and insured to do it. Largely because of all this we decided to go with the company they originally dispatched. They came in at $3700 less the cash in lieu amount of $775 so just under $3k for this project. Sucks paying retail and I feel.. Middle of the road when just looking at this project in terms of AHS. I feel confident I could get the project done for closer to $2000 total if I was managing it, however both because this house is under IRA and there's additional rules and possible scrutiny there, but because AHS was insisting on essentially verifying the licensed/insured part, we pulled the trigger on this one.
Yesterday: Initial call from tenant was AC not working. We had it charged recently so that's peculiar. Upon further examination, something weird is happening electrically on condenser unit circuit. Like, something I've never seen before - it makes a violent rattling sound when the AC condenser is running, and that circuit breaker (a 30A/2P) is closed. Sound is right above the panel. This work order is in process and they dispatched a company that has experience/licenses on both the AC and the electrical side. My suspicion is that the panel 'should' be replaced as it is a Federal Pacific and such... We will see on this one.
In total I feel with this pretty steady outflow of $500 / mo we are at roughly $1500 cost for these services.
My analysis on this decision goes something like this:
Let's sum our costs, and compare to our benefits.. Which consist both of money saved, and time saved (I have to put some assumption of what my opportunity cost of time is)
On the Cost side, we're at the $1500 total roughly.
On the benefit side, we'd be at $1183 + $200 + $0 (I think this outflow is pretty 'in line' with a turnkey AC replacement option given the above constaints... + (not sure we'll see how the most recent electrical / AC one turns out) + my time saved which I'm estimating would be at maybe 2 days total to deal with these items one way or another (either actively manage or vet/bid stuff etc)... Which I'd put my time at invaluable :) Maybe $300/day, I don't know....
So I'm getting something like a $1500 cost vs a $2000 benefit. With HomeServe really being the star of the show mostly just because of the data points we've had so far. Yes, I'd do it again, as of right now. Will try to follow up every so often.