Home warranty experience?

Question

Phil Earley · Answer

If all of the major systems/hvac/appliances in the home are coming to the end of their useful life and your cash flow is low, a home warranty can be peace of mind for the short term.  Once cash reserves are built back up, you can discontinue the warranty.

Read the fine print for roof leaks, outside plumbing issues, flooded basements, washer/dryer, and fridge.    These are typically not covered in the basic plan but for a very small fee, they can be and may be well worth it.

Ryan Beacher · Answer

@Rasheed Mcdaniel I had AHS for a condo property in FL a while back. I actually had a decent experience with them. All the contractors I had were pretty good. Biggest benefit I received was a replaced ac unit for the condo (I only had freon added once before they replaced to my recollection), and only paid the one time service fee. I also utilized it for other small things that came up (dishwasher, garbage disposal, washer/dryer). The nice thing was, I could call and have someone (plumber for example) scheduled to go out to the property, perform whatever needed, and know that I'm only going to be out of that service fee. Sounds like I'd be for it, but I actually wouldn't recommend in most cases. I think it can be great for someone if they're not going to be disciplined or would have trouble setting aside the funds needed for maintenance and upkeep. But like someone mentioned earlier, just doesn't make sense to me for multiple properties. I think you lose out in the long run. I'm still on the novice end... but think it's much better to set up the business like a business and be disciplined to set aside the funds every month in an escrow account that you can draw from when needed. The property management company I've used actually puts a designated amount into escrow each month automatically. Like I said, still a novice, so not sure if that's common or not.

Jeff A. · Answer

I found them to be a rip off,  I had them come out for a heat/air system, and they found every excuse to not pay, I didn't clean it enough, not a covered repair or they wanted to patch it.   I cancel and continue to pay into a saving account,  after a year, I was just a little ahead.  Additionally I quit doing the heat and air service contracts,   I change the filter, and hope for the best.    For me it's been the better program.

James Steele · Answer

To add to the above, I guess it might depend on how you prefer your expenses in the property.  With an AHS warranty, for the most part you'll have a steady premium, then the occasional extra $75-$100 service call fee to fix issues (except the above A/C example), instead of the potential unexpected replacement of appliances which can cost more in a given month/year, but over the course of several years will likely work out cheaper.

Rasheed Mcdaniel · Answer

Jeff A. thank you for your responses, their services promises did kinda seem almost to good to be true. With no one around to share their experiences and points of view with me i was just at their mercy for my own story to unfold however it may. Now at lest i have some foresight in order to prepare myself.

James Steele · Answer

I've read through their contract, Jonathan G. is spot on about the freon.  They only cover $10/lb for freon.  This house I've had serviced three times in the last 5 years (and it needs it again), and freon (R22) is going up each year, I think $35/lb was the best price I was able to find last year, and it just keeps going up.  It's possible that, since you can't shop around for your own under AHS, that they'll send someone out charging $50+/lb, leaving you with a majority of the bill.  Unless you have high end appliances, chances are you will definitely spend more on service call fees and premiums than replacing appliances when they near the end of their lifetime, and come close to the cost of a new A/C system in fees, premiums, and freon before they'd replace it instead of repairing (especially considering, at $100 per service call and only $10/lb off freon, I can find HVAC contractors to come out and top off freon for less on my own, in Florida).

Rasheed Mcdaniel · Answer

@Christian Bors Thank you for your response. sounds exactly like every other typical "insurance" company take your money and deny coverage as much as possible. I will save my money as much and fast as possible, and cancel as soon as i have a nice safety net

Rasheed Mcdaniel · Answer

thank you everyone for your responses, as always this forum and bigger pockets in general have been VERY helpful where I would otherwise be lost.

@Phil Earley thank you, as for right now I think your idea sounds best for me at my current point. I just started and although I do not have the extra money throw away on a warranty that I may not even need I REALLY do not have the money to spend on an occurance if one should arise and I'm not covered. as soon as I build a nice cusion of my own I think I will discontinue the warranty as per your suggestion.

@Ryan Beacher thank you for your response, i do intend to scale and get into bigger properties with way more units. with that said as you mentioned i don't think multiple properties with them is a good idea like i originally did after doing the numbers following your response.

@Howard Klahr great idea, thank you. maybe when I'm ready to scale using a 1031 i may repurchase at that point to have as an extra selling point.

@Justin

@Justin Fox yea that's my thought process aswell, and with me only two months into my first deal money is super tight right now. i think ill finish out my first year with their coverage as a safety net and in that time build my own savings for capex

Howard Klahr · Answer

The best use of a home warranty is as a marketing tool for a seller to allay buyer concerns.  Build the price of the warranty into the sale price of the house.

Justin Fox · Answer

I have had a lot of luck with AHS.  I include the monthly premium as part of my repair/capex contribution and put less that into a savings.  I mean, where else can you find a handy man for 600/year that only charges 80 bucks to come out and replaces the problem for free or at a very steep discount?

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