Home Warranty vs. saving cash reserves for CapEX (or both??)

[Miles Stanley]

To preface, i wholeheartedly believe in having cash reserves for surprises.  I'm just looking for opinions.  That said...

I'm sure there is some debate around this (like everything else), but i recently met with a local buy and hold investor/realtor. In his strategy, he doesn't save much for Cap Ex, but he swears by this home warranty he uses on all his properties (4 SFR's). He said he pays a service call fee (like $70) when an appliance or something fails and the warranty replaces it for free (just having to pay the service charge of $70).

My concern with this was what happens when the roof (for example) just wears out (not damaged by hail...or something else that would be covered by insurance or warranty).  i would think that replacement would have to come out of pocket.  So any cash flow that he has accumulated to date would be wiped out to replace said item.

Am i correct? 

Are home warranties worth it?  

has anyone used them?