Home warranty...any recommendations?

Question

Hello all,

I hope I threw this in the correct forum or atleast semi correct. I have a condo that is about 15 years old and along with that are the water heater and A/C unit. Should I get a home warranty seeing that the water heater or AC can go at any minute. Which companies would you recommend if so? Also, does anyone know if these policies cover if you are renting out the space or not? I will be renting out my condo in about 6 months.

Thank you all for the help and I love this community!

Jody Sperling · Answer

Any home warranty you'll buy will calculate the age of your major expenses and cost you the price of the products you're looking to replace. It's the same with insurance. If your roof was 15 years old, the insurance would be sky-high to factor in the likelihood of damage to the property due to leaks, breakage and disrepair. If you're a high cancer risk, health insurance will cost you a premium.

Don't strangle your cash flow with a home warranty and throw money at something you'll never get back. Know you have an upcoming capital expense and ensure you have some capital in an easy-to-access place. I like keeping my emergency fund in a cash value life insurance policy, with guaranteed growth where I can borrow against it when needed and repay on my terms.

(Yes, I know this sounds like a commercial for an insurance agent—I'm not one. And yes, there are tons of uneducated folks who say Whole Life Insurance is "a terrible asset". They're right. Because you don't get it as an asset, you get it as an account. I can't think of any savings account that would guarantee 4% compounding growth, and for what it's worth, banks hold more Life Insurance than any other person or institution for similar occasions as the one you're asking about. It's called BOLI.)

Best of luck!

Jim K. · Answer

@Kristopher Kelly

I don't use home warranties. What you need are short-term financing options to handle repairs when they go boom-boom in your life.

Of course, the best solution is to have a war chest ready to go, built through careful capital expenditure budgeting and saving. That's really difficult when you're just starting out.

What's not so difficult is having acceptable credit, and in this economy, that makes another solution viable.

Get a credit card with a high balance and no membership fee and do not use it. Keep it to the side. It doesn't matter what the interest rate is. When an expense hits, put it on the credit card. Immediately, open a 0% balance transfer card account next. You're looking for 18 months of no interest on balance transfers with a one-time 3% or 4% balance transfer fee folded into the transfer. Transfer the debt from your high-limit card to your balance transfer card, and diligently pay off the debt over the next 18 months.

It takes discipline, but this technique will allow you to immediately finance repairs for pretty much everything for a 3-4% one-time fee.

Bad credit? This fast-and-easy short-term financing avenue is closed to you.

Good luck!

Gayle Eisner · Answer

I have used American Home Warranty on my rentals for the past 20 years.  The older the house, the more you might consider a home warranty.  The cost I pay is $85 per visit.  The cost of the yearly warranty is around $400-500.  On the plus side, they do numerous common repairs, but you must read the contract to be sure it is paid for and you can add "extras".   My one rental property duplex is 86 years old AND it is located in the mountains.  Just the fee for any company to drive to the house is usually $50-$75 alone so the warranty company saves me money right there. Many regular contractors will not even come to the mountains... AHW have paid for new water heaters, , propane  plumbing, washer dryer repair, as well as replacing other appliances, such as a refrigerator and a dishwasher.  In one of my homes they installed a new heating system that only ended up costing me $800.  Another I had an entire stove top replaced for free, minus the $85 fee.  It has been a blessing to me as it is difficult to find a reliable handyman and I am not much of a do-it-yourselfer AND they charge one fee for both units.

On the down side, sometimes they have shoddy repair companies.  I usually look on Yelp before they send someone out for repair.  I have been working with them so long I can navigate some of the resistance they can put up for fixing things as well.  If I can, I ask not to use that company and they will accommodate my request most of the time and find someone more reputable ..  Also, they sometimes add fees.  For instance, when I had a water heater replaced, the company charged me $400 for the added cost due to the fact it was propane hook up.

Further, there are long waits to get a hold of the company and I find myself having to follow up with them many times but I try to push this on the tenants as much as I can. That way they can have some flexibility over the situation and be home for the repairs.

Overall, I have been extremely happy with using a warranty company.  It can be a real headache at times, but overall it has paid for itself many many times over the years.

Home warranty...any recommendations?

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