Home warranties for rental properties?

Question

I am a relatively new landlord, I currently manage 3 of my own rental properties and I recently spoke with a seasoned property manager and he suggested I get an American home shield policy for each property. I wanted to get some thoughts from other landlords on what they thought about getting home warranties for investment properties for major systems such as heating and cooling systems, plumbing and electrical.

Bill B. · Answer

Please click on the magnifying glass in the upper corner. This is literally asked monthly if not weekly.

TLDR: they are bad deals and worthless for homeowners. They are much worse for landlords.

Bryce Jamison · Answer

Have you tried having your tenants purchase a rental insurance policy that specifically covers the things your worried about with you added on as an additionally insured as the home owner? You could pay for it yourself if you want. Then if you ever need to file a claim it goes against their policy and not yours. You could even require that they purchase it through a more reputable insurance company.

Jaron Walling · Answer

@Bill Brandt Home warranties... what a joke.

I was convinced I needed on one my very first house. Turns out they don't cover s***. Never again.

Dawn P. · Answer

Those home warranty companies are awful to deal with. You're better off just setting money aside for future repairs and calling a trusted HVAC/plumber/repair company. Much faster and easier.

Nathan Williams · Answer

Not a fan of home warranty. I tried to use it 3 times over the years and each time they found one reason or another to deny it but of course only after I paid the initial visit fee.

Randall Alan · Answer

@Cade Antonucci

Personally I would tell you they are a nightmare to deal with.   As an example… we had an AC fan motor go out.  Any regular repair person would have fixed it in a day.   The warranty repair company has to order in the part from their supply chain (not source it locally) … it took 3 weeks to get the part in.  Who can go 3 weeks without AC in sunny florida?  Plus you have to pay a deductible for each trip - when you already paid them maybe $700-1000 for their warranty.  A fan motor replacement is about a $300 repair.  So you would probably have to have about $1,200 in repair expenses before it would start to be cost effective.  Also know that often times many systems  that could fail aren’t covered… so definitely pay attention to those details.

Their customer service was outsourced the last time I dealt with them… to India, which was frustrating. Frequently I couldn’t connect with them on what the issue was… basically making it a very frustrating process.

We have 37 units, and our typical rental would not meet that threshold to be worth it in a year  Yes, there is a chance your AC compressor could go out and you come out on top where the warranty was cost effective… but in my experience it is unlikely - and the frustration isn’t worth it.  As a landlord I need things resolved quickly… nothing moves quickly with warranty companies!

All the best!

Randy

Home warranties for rental properties?

Most Popular Reply