Home Warranty or Service Contracts for medium to large portfolio

[Muthu Subramaniam]

Hello, I would like to find out from the investors with medium to large portfolios of rental properties (preferably 10 units and higher) if they use any home warranty or service contract for property maintenance. On paper, it makes sense to use such a service to have a predictable cost allocation towards maintenance. But the reviews of the all the top home warranty companies don't give a good feeling about the practicality of using one including poor service, delayed appointments, multiple visits to fix an issue, keep patching the appliances and systems instead of replacing, offering low replacement costs if they decide to replace, not to mention the tenant frustrations because of these issues. I've had home warranty for my primary home in the past and faced the same issues. Wondering how other investors of medium to large portfolio are dealing with this or are there any alternatives to manage increasing cost of maintenance?

[Kevin Sobilo]

@Muthu Subramaniam, the larger the number of units the easier it is to budget for and weather the ups and downs of property maintenance costs.

A warranty will cost SUBSTANTIALLY more in the long run than the value you get from it. That is a given. 

Where a home warranty COULD make sense is for the SMALL time landlord without many units and without the resources to handle a significant maintenance issue. In that case the extra cost of a home warranty is worthwhile to provide security in case of a significant issue. Keep in mind a purchased warranty is really just a type of "insurance"