Home Warranties for Buy & Hold Investors

[Atul Kaushal]

Happy New Year! Thanks to the BP community and wonderful books / podcasts, we were highly motivated to grow our nascent REI business in 2018 and went from three units to ten units over the last 12 months. They are condos, townhomes, and SFHs in B+ / A- neighborhoods, costing between $170K and $240K, and meeting (at minimum) the 1% rule. I know there are a lot of other ways to measure returns, but we like the 1% as a rule of thumb and just the simple cash flow at the end of every month to keep the businesses going.

There are approximately 60 appliances (six per home) + systems like HVAC, hot water heater, electrical, etc.  I'd be grateful for others' input on getting home warranties for these rental properties.  Seems like the average cost would be about $600 per year and might save some time / headache in repairing or replacing some of the older appliances and especially with some of the older systems.

American Home Shield actually let's me select which appliance to cover, so that if I update a kitchen and put in new stainless appliances (with manufacturer warranties), I can take those off the list at AHS and my rate comes down.

Or is it better to let the appliance break down, replace them with new ones, and then go with the manufacturer's warranty?

Thanks in advance for your thoughts!

AK