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Landlords often have to make tough decisions especially when it comes to maintenance and the cost of repairs. This four part series has discussed the pros and cons to purchasing a home warranty policy. While things may seem one sided suggesting that a property owner should not hire a home warranty company to help manage their maintenance needs, it truly depends on the landlord. This final section will cover when an owner should consider purchasing a home warranty and when they shouldn't.

Should or Should I Not Purchase a Home Warranty?

With all the disadvantages, when should I have a home warranty?

Viewpoints often vary from person to person and landlords are no exception to this. When owning investment property, some people dread the day when the phone rings just to find out that the tenant reported a slab leak which will cost $2000 to repair. Others panic when they are told the dishwasher stopped working which will cost $350 to replace.

Don’t get me wrong, there is never a time where I jump up and down for joy when the phone rings and someone tells me that its going to cost $1500 for an unexpected repair. However, people react very differently to this type of information. Some landlords will say “tell me how much and where to send the check.” Others go into shock and won’t return your phone call for days and when they do, its usually a friend or family member making the call.

For those of you who become overwhelmed when a repair is needed or those who struggle to make ends meet each month financially, then purchasing home warranty policy makes sense. Property owners should never place themselves into a situation to where they cannot afford to make necessary repairs or cause themselves severe emotional stress.

Another time to consider signing up with a home warranty company is if the home is getting older and many of the larger components have not been recently replaced like hot water heaters or heating and cooling systems. Keeping in mind that there are a lot of different reasons a warranty company can chose to deny coverage, this could be beneficial if they cover the cost to repair or replace the system for you and your tenant.

Finally, if an investor is purchasing a home, it is always beneficial to include a warranty policy for the first year. Even with a home inspection, there is no telling how long that wash machine or oven is going to work. The last thing a landlord needs is for several things to break down in the first year of owning the property after investing all that time and money into purchasing the home.

When is purchasing a home warranty not a good decision?

Long term property maintenance requires good planning. Many investors have set aside a reserve account or save a certain amount of money each month which is designed to pay for repairs as they come up. If you are the type of person who either is able to save a certain amount each month and not use it until its needed or you have enough money stashed away for a rainy day then a home warranty policy is most likely not in your best interest.

For most landlords, they are often better off saving the $400 to $500 a year that it costs to purchase a home warranty policy due to the many disadvantages. Property owners are frequently forced by local laws to put the tenants up in a hotel or pay for uncovered charges while repairs are being made to the home. While $400 doesn't seem like that much money to spend each year, if a tenant has to stay in a hotel for 8 nights, it could easily cost outweigh the cost benefits of having a warranty especially if the landlord has to pay for additional charges that are not covered by the policy.

In addition, landlords are not confined to using vendors supplied by the home warranty company. You are free to use who you want giving you more control over the quality of work that is done and the length of time it takes to complete a repair. Technicians servicing your property only have to answer to you. So if a part needs to be replaced, they can call to get your approval right away. Furthermore, if someone can’t make it out to your property soon enough, you can call another company out so they can fix the problem for your tenant more quickly instead of having to wait.

So what does this all boil down to?

In general, home warranty policies do not provide landlords with a lot of benefits when factoring the disadvantages. For some, it makes perfect sense. However, in most cases the property owner is better off saving their money so when the time comes, they can pay for the repair and have more control over how and when its done.


Compare the Advantages and Disadvantages of Home Warranty Companies - by