All Forum Posts by: Michael Mendez

Quote from @Jameson Cunningham:
Hey y'all, follow up to this post, we moved from Savannah and have been in Lubbock, Texas for the last 18 months. We sold the house this past may for 190k (cash offer) and now own three properties in Lubbock with the intent to acquire a fourth in the next month and a fifth before the new year.

@Michael Mendez

In my experience, it's not worth it. I had home warranties on two of my rental properties for two years but after running the numbers it didn't make sense to keep the home warranty. It cost approx. $50/month per home (plus a $75 service fee each time they sent a contractor to the home). My observations were:

1. Read the fine print! There were a LOT of loopholes built into the contract of what the home warranty wouldn't cover. Many home warranties require you to pay for upgraded coverage for items such as refrigerators and garage doors. There are also annual coverage limits that cap the amount of repairs the warranty will cover on each system.

2. The contractors that were utilized by the home warranty companies were (in general) not high-quality. The home warranty company wants to repair the issue at the lowest cost, so they choose contractors they can get at the lowest price. When they sent contractors to the homes, I'd look them up on Google Reviews, Yelp, etc and most times they were about 2 out of 5 stars.

3. The turnaround times of the repairs were slow. It often took several days for the home warranty company to get a contractor out to the home, even if the repair was for a critical system (e.g. HVAC stopped working in Maryland in January).

Bottom Line: Instead of paying for the home warranty, I'd rather set aside the $50 per month as part of my monthly repair/CapEx. I can coordinate higher-quality contractors and do it more quickly than the home warranty company does....and after totaling all the costs, I can do it for cheaper.

Ha! If only life were that easy.

when it comes to home warranties, The House always wins. Their responses are delayed, they refuse to cover things that you thought were covered, they send the lowest bidder, he will often do shoddy repairs when replacement is necessary, etc. Most professional property managers will not even manage a rental with a home warranty because it's so difficult. 

Hi @Michael Mendez. This is a strategy that is used for sure.  However, YOU need to get the home warranty. The idea with self management is that any repairs needed under, say $250/month a tenant covers.  Anything over that amount, you cover.  If you have the home warranty, the warranty covers it so you are protected both ways.

Make sure you video the property and all the mechanics (furnace, AC, hot water heater, etc.) both for the warranty and for record of condition with the tenant.

Quote from @Michael Mendez:

Quote from @Jose Grimaldo:

Quote from @Michael Mendez:

I personally have gone away from BRRRR, I think it is amazing, however, it's time to pivot. I invest in Lubbock and gravitate towards turn in key properties. Lubbock's avg sales price is $255k, we saw tremendous growth over the last two years.

 I'm sorry what is turn in key? 

Sorry, it's a property that is ready to be rented out. Your can turn the key over to the renters or property management.

 Gotcha. Since your from the Lubbock area, any specific lender you like working with?

Quote from @Jose Grimaldo:

Quote from @Michael Mendez:

I personally have gone away from BRRRR, I think it is amazing, however, it's time to pivot. I invest in Lubbock and gravitate towards turn in key properties. Lubbock's avg sales price is $255k, we saw tremendous growth over the last two years.

 I'm sorry what is turn in key?