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      08-02-2020, 06:51 PM   #1
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Home warranty worth the monthly fee?

Renting out an investment property soon and since I'm local, will be managing it myself.

Definitely interested in possibly spending a couple bucks on a home warranty though as most major appliances are about ~10 years old at this point.

Given that, anyone have a recommendations on a decent one, or even if they're worth it in general? Tennant has to kick in $100 for every service call, so not too concerned about those that require a deductible...more interested in annual limits on coverage and/or if specific companies make it a PITA to actually honor the work, etc. so actual experience/feedback would be appreciated.

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      08-02-2020, 07:36 PM   #2
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First off, I'd make sure that whatever one you choose will pay out on a rental property and not just an owner-occupied home.....
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      08-02-2020, 08:47 PM   #3
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Their labor rates are the lowest in the industry.
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      08-02-2020, 10:05 PM   #4
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Quote:
Originally Posted by FCobra94 View Post
Renting out an investment property soon and since I'm local, will be managing it myself.

Definitely interested in possibly spending a couple bucks on a home warranty though as most major appliances are about ~10 years old at this point.

Given that, anyone have a recommendations on a decent one, or even wof they're worth it? Tennant has to kick in $100 for every service call, so not too concerned about those that require a deductible...more interested in annual limits on coverage and/or if specific companies make it a PITA to actually honor the work, etc. so actual experience/feedback would be appreciated.

TIA!
Total worth it. Go to American Home Shield. They are one of the largest and best known. I had a similar situation. I bought a townhouse in FL and the water and air conditioners are 15 years old. I negotiated to have the owner pay for the first year. The cost was $450. It's $75 for each visit and they will replace anything that breaks if they can't fix it. I had this on another house and it paid for itself 3x over.
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      08-02-2020, 10:08 PM   #5
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Bear in mind that all warranties and insurance policies are priced (the monthly premium) to the benefit of the issuer (the insurance company). This means it is not in your financial best interest to purchase a warranty or insurance policy.

What you are buying is increased certainty, which gives some people some peace of mind they are willing to pay for.
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      08-02-2020, 10:27 PM   #6
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So let me get this straight, you want to buy a warranty on a house you're renting out to potentially replace some appliances that are about a decade old?

Waste of money.

I have about a dozen multi family units and you know what I do when a refrigerator, or oven, or microwave quits working? I buy a used one on Craigslist or offer up and throw it in there!

But I like money and cutting costs, so that's just me.
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      08-02-2020, 10:55 PM   #7
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Never did one myself, but 3 friends/family have, and all had very disappointing experiences when they needed to make a claim. Very slow and incompetent contractors and they have to keep bugging to get a resolution. I don't know how much it is worth to you to go 'a few weeks' without hot water or other major appliances/plumbing functions, but to me that makes it a no-go.
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      08-03-2020, 06:17 AM   #8
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Quote:
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Quote:
Originally Posted by FCobra94 View Post
Renting out an investment property soon and since I'm local, will be managing it myself.

Definitely interested in possibly spending a couple bucks on a home warranty though as most major appliances are about ~10 years old at this point.

Given that, anyone have a recommendations on a decent one, or even wof they're worth it? Tennant has to kick in $100 for every service call, so not too concerned about those that require a deductible...more interested in annual limits on coverage and/or if specific companies make it a PITA to actually honor the work, etc. so actual experience/feedback would be appreciated.

TIA!
Total worth it. Go to American Home Shield. They are one of the largest and best known. I had a similar situation. I bought a townhouse in FL and the water and air conditioners are 15 years old. I negotiated to have the owner pay for the first year. The cost was $450. It's $75 for each visit and they will replace anything that breaks if they can't fix it. I had this on another house and it paid for itself 3x over.
We went all of a July without HVAC because we were fighting AHS after their contractor screwed up an install of an evaporator coil.


One other issue we had revolved around the approval process. It would take a couple of days for AHS to approve the work.

Ex, fan in refrigerator went out. Took 2 days to get a visit, then 2 days to get approval, and 3 days to get the part 2 days to schedule the repair visit. Basically took a week to replace a $30 fan.
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      08-03-2020, 07:29 AM   #9
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We went all of a July without HVAC because we were fighting AHS after their contractor screwed up an install of an evaporator coil.


One other issue we had revolved around the approval process. It would take a couple of days for AHS to approve the work.

Ex, fan in refrigerator went out. Took 2 days to get a visit, then 2 days to get approval, and 3 days to get the part 2 days to schedule the repair visit. Basically took a week to replace a $30 fan.
Wow. Sorry to hear. I always had a good experience with AHS.
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      08-03-2020, 05:23 PM   #10
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Would not buy as others have said the warranty companies do whatever possible to get you to buy the warranty, then do whatever possible to not pay for the repairs. As a business they pay a Sales department, overhead (buildings, claims people, mgmt) then make a profit.

As you said you have a place with old appliances, if they break someone will pay the $100 to fix these old appliances and this is after dealing with the repair and claims process. Have money set aside, when something breaks decide if it is worth fixing, otherwise spend the money on new (or newer) stuff.

Also confused as to how the tenant will be required to pay the $100 service call. I have had apartments in the past, soon to have a gutted house ready to rent, and have lived in a lot of apartments and appliances, heat/AC were always fixed at the owners expense. Renting a place with 10 year old appliances and finding out that if anything goes wrong with them I need to pay $100 and wait for the warranty company would have me looking somewhere else. When will the tenant find out the appliance service calls are on him?
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      08-04-2020, 02:08 AM   #11
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Quote:
Originally Posted by BimmerDimmer6 View Post
I have about a dozen multi family units and you know what I do when a refrigerator, or oven, or microwave quits working? I buy a used one on Craigslist or offer up and throw it in there!

But I like money and cutting costs, s
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      08-04-2020, 06:57 AM   #12
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Quote:
Originally Posted by BimmerDimmer6 View Post
I have about a dozen multi family units and you know what I do when a refrigerator, or oven, or microwave quits working? I buy a used one on Craigslist or offer up and throw it in there!

But I like money and cutting costs, s
Slumlords
I've got a few section 8's, knock it all you want, but guess who never misses a payment regardless of economy?
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      08-04-2020, 08:03 AM   #13
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I am the "upgrade on failure" type...with electronics, appliances, etc. It is cheaper to pay a Chinese laborer to make a new widget than it is to pay an American laborer to repair the old one.

That being said, my beloved German Unobtanium-brand washing machine broke a strut and shredded its drum roller assembly a few years ago. Just as I was resigned to look at the latest offerings from Korea, my DW went on Craigslist and as luck would have it someone was selling the exact same washer for parts because the glass in their door broke. Fifty bucks and a short drive across town in the Mighty Dodge later, and I had a replacement strut/roller assembly that was not available from the manufacturer. I also stripped the motor and electronics from the donor, so we have spares of most parts for the future. Oh, and my DW sold the stainless steel drum from the donor on eBay for $100, so we actually turned a profit on the deal.....
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      08-04-2020, 01:32 PM   #14
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I am the "upgrade on failure" type...with electronics, appliances, etc. It is cheaper to pay a Chinese laborer to make a new widget than it is to pay an American laborer to repair the old one.

That being said, my beloved German Unobtanium-brand washing machine broke a strut and shredded its drum roller assembly a few years ago. Just as I was resigned to look at the latest offerings from Korea, my DW went on Craigslist and as luck would have it someone was selling the exact same washer for parts because the glass in their door broke. Fifty bucks and a short drive across town in the Mighty Dodge later, and I had a replacement strut/roller assembly that was not available from the manufacturer. I also stripped the motor and electronics from the donor, so we have spares of most parts for the future. Oh, and my DW sold the stainless steel drum from the donor on eBay for $100, so we actually turned a profit on the deal.....
Oh, this is magnificent. You guys would make good landlords! Number one reason why landlords fail, they overspend on the property trying to improve it to a standard that will attract buyers. Most renters don't care, just want a safe place to live for a few years. Flips you treat differently depending on target customer.
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      08-04-2020, 02:10 PM   #15
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Oh, this is magnificent. You guys would make good landlords! Number one reason why landlords fail, they overspend on the property trying to improve it to a standard that will attract buyers. Most renters don't care, just want a safe place to live for a few years. Flips you treat differently depending on target customer.
I agree but also depends on where and what you are renting. Your section 8 buyers are unlikely willing to pay extra for anything past something working but then I have a house in one of the nicer neighborhoods in our city and renters expect more. "Safe" is every house in the area and if all you want is safe there are much cheaper areas to live. My total gut renovation should work out pretty well and rent between $2500-$3000 a month in a city where this is a lot of money. Difference in $2500 and $3,000 at least somewhat comes to the layout, finishes and extras.
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      08-04-2020, 02:16 PM   #16
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Oh, this is magnificent. You guys would make good landlords! Number one reason why landlords fail, they overspend on the property trying to improve it to a standard that will attract buyers. Most renters don't care, just want a safe place to live for a few years. Flips you treat differently depending on target customer.
I agree but also depends on where and what you are renting. Your section 8 buyers are unlikely willing to pay extra for anything past something working but then I have a house in one of the nicer neighborhoods in our city and renters expect more. "Safe" is every house in the area and if all you want is safe there are much cheaper areas to live. My total gut renovation should work out pretty well and rent between $2500-$3000 a month in a city where this is a lot of money. Difference in $2500 and $3,000 at least somewhat comes to the layout, finishes and extras.
And what will you cash flow on the property?
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      08-04-2020, 02:59 PM   #17
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And what will you cash flow on the property?
I am confused as to what that has to do with my statement that doing the cheapest doesn't always make the most sense.

If your point is investing in a lot of cheap housing comes with the potential for higher returns, I completely agree but this has nothing to do with my post. The blanket statement that people just want safe housing and anything above this is a waste of money is wrong.
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      08-04-2020, 03:06 PM   #18
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And what will you cash flow on the property?
I am confused as to what that has to do with my statement that doing the cheapest doesn't always make the most sense.

If your point is investing in a lot of cheap housing comes with the potential for higher returns, I completely agree but this has nothing to do with my post. The blanket statement that people just want safe housing and anything above this is a waste of money is wrong.
David, I agree with what you're saying as far as quality of materials all being relative. I'm just curious as to what kind of returns you're seeing on a higher end property. I have no idea as I haven't ever purchased anything other than affordable housing for the sole purpose of positive cash flowing.

All good if you don't want to share.
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      08-04-2020, 03:58 PM   #19
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David, I agree with what you're saying as far as quality of materials all being relative. I'm just curious as to what kind of returns you're seeing on a higher end property. I have no idea as I haven't ever purchased anything other than affordable housing for the sole purpose of positive cash flowing.

All good if you don't want to share.
I would stick to lower/medium priced properties as they require less money to buy, take more work which is why too many go towards high end, where headaches are lower but cash flow is also lower. My first house was a triplex and I lived in one apartment, cash flow was great, my expenses were low. I haven't owned a rental in about 13 years.

This property has a long story behind it and great investment was never part of it. House next door to ours (8' between houses), owned by church for 47 years, nobody has lived in it for about 25 years, just used for storage/meetings, a real dump. Close to city, nice neighborhood and small amount of land.

House going up for sale, a number of things could happen, #1 tear down & bigger house put there, our deck would then look into the side of someone's house, #2 someone buys it & fixes it up, #3 someone buys it & doesn't really fix it up & I end up with bad neighbors. 1 week to submit offers, no negotiations, highest bidder wins. We purposely paid too much as the rest could find another property. Complete inside gut with new layout but was able to swing paying for it & renovation with cash so reality is my cash flow will be great (zero debt and low maintenance as everything is new) but as an investments pretty mediocre. I end up in it for hopefully $450k but bring in about $2100 a month after expenses (mostly taxes/insurance) plus hope for property appreciation to add a few % to the investment.

Big part of the reason for the purchase, besides controlling who I live next to is I will build a 2 car garage in the backyard of this house and keep it for my own. Almost impossible to have a 3 car garage (2 there, 1 at our house) in my neighborhood, likely the only way as 2 cars spaces will be next door and we keep a little yard.

Most work is being done by pro's but I am spending all free time working on the house and have for the last 7 months. Figure pro's are charging $50 an hour (at least for the framers) and whatever I do cuts this cost.

While you said over spending on improvements is #1 mistake I would put it #2. I think #1 mistake is people think they can buy a property and not expect it to be a part time job. Difficult to make paying a property manager work as they eat into the profits and often don't do much actual work.
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      08-05-2020, 11:26 AM   #20
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While you said over spending on improvements is #1 mistake I would put it #2. I think #1 mistake is people think they can buy a property and not expect it to be a part time job. Difficult to make paying a property manager work as they eat into the profits and often don't do much actual work.
Agreed. While spending on improvements might not offer the best return in terms of overall profit, etc. it certainly entices more qualified renters and lends to getting homes rented much quicker; at least in my case anyway. The overall condition of the home as well as the higher end fixtures, etc. is what ultimately led to finding a highly qualified renter within 15 minutes of it being listed on the MLS.

But then again, the initial goal wasn't to rent; I splurged on 'nicer things' because I was living there for quite some time and wanted to enjoy it...plus I'm handy so did all of the upgrades myself. Having said that though, seeing an opportunity to rent, I took it and will sock away the cash for when the next one rolls around, which likely won't be 'as nice.'

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I'm just curious as to what kind of returns you're seeing on a higher end property.
In terms of returns on, what I consider to be a 'higher end property', rent is 150% of my 15 year mortgage payment.
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      08-05-2020, 02:03 PM   #21
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BimmerDimmer6 what was that Danny Devito movie where the judge sentenced him to spend time in his own property?
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      08-06-2020, 08:41 AM   #22
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Agreed. While spending on improvements might not offer the best return in terms of overall profit, etc. it certainly entices more qualified renters and lends to getting homes rented much quicker; at least in my case anyway. The overall condition of the home as well as the higher end fixtures, etc. is what ultimately led to finding a highly qualified renter within 15 minutes of it being listed on the MLS.

But then again, the initial goal wasn't to rent; I splurged on 'nicer things' because I was living there for quite some time and wanted to enjoy it...plus I'm handy so did all of the upgrades myself. Having said that though, seeing an opportunity to rent, I took it and will sock away the cash for when the next one rolls around, which likely won't be 'as nice.'

In terms of returns on, what I consider to be a 'higher end property', rent is 150% of my 15 year mortgage payment.
On the surface it sounds like a good investment but not nearly enough information to tell as this is one of many costs (taxes, insurance, maintenance) and no idea what you have put in it (downpayment, repairs, improvements).

This is a good site to help figure out returns - https://www.calculator.net/rental-pr...ype=&x=55&y=28
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