Should I use a home warranty company?


Many rental property owners and investors ask the question, should I use a home warranty company for my rental property?  Our answer and the answer of many other experts in the field of property management would agree, you should stay far away from home warranties.  You may wonder, why?


There are many reasons you should not use a home warranty company for your rental property.  Here are some reasons to consider.  Home warranty companies tend to have:


Delayed response times

·         Typically, once you reach out to a home warranty company, turn around times are two to three business days.  To make matters worse, home warranty companies do not typically dispatch vendors during non-business hours.  This could include nights, weekends and/or holidays extending your repair time even further.

·         When you have a problem with their services, you will spend a significant amount of time on the phone getting the run around.

·         Emergencies are subjective.

o   What may be considered an emergency to you, property managers and/or tenants (i.e., AC stops working during the middle of the summer in Texas), the warranty company may not consider an urgent matter.  In turn, an AC repair may take anywhere from a few days to a couple weeks.

·         Home warranty companies do not allow hired contractors to purchase specific repair parts locally.  Rather, they ship refurbished replacement parts to their contractors via mail, adding days to repair times.


This leads to additional reasons to avoid home warranty companies.  Home warranty companies are,


Money Minded


The priority of home warranty companies is the overall profitability of their business.  Keep in mind, this means neither you (the prospective home warranty holder), the property manager nor the tenant are the top priority.  It is, however, as a landlord your legal and moral obligation to provide a safe and properly functioning home for your tenants.


These companies are in the business of solely making money.  Home warranty holders are usually charged annual fees in addition to service call fees and items you would assume are covered by the company may end up costing you.


·         Read the Fine Print

o   There are many loopholes warranty companies use to avoid covering and/or repairing large ticket items.

§  For example, water heater repairs may not be covered if it is simply one pound above their determined PSI limit (although pressure continuously fluctuates) ultimately costing you several hundred dollars.

o   Home warranty contractors can add on to the cost of repairs for so called “modifications” at the policy holder’s expense. These are usually sprung onto you last minute pressuring you to just get the whole ordeal over with.

·         Low Skilled Labor

o   To save money, these companies may select a contractor based only on price rather than incorporating their level of expertise.  This may lead to requiring follow up services that were not properly repaired the first round (along with charging you another service fee).



By choosing to avoid a home warranty company

You can save time, money and even your sanity


Your home is a special investment and needs to be properly managed and maintained.  Rather than gambling on a home warranty company, it is highly recommended to simply open a savings account specifically for home maintenance and repairs.  Start by adding what the warranty company would have charged you in enrollment fee’s.


Property management companies can assist in assessing quality contractors and technicians in a more reasonable time frame.  Most of the time, this can be covered for less than what you would be spending for a home warranty.  Resulting in more satisfied tenants, avoiding unnecessary costs, and higher quality of workmanship performed on your rental home.


Which will result in building long term satisfied tenants ultimately generating more investment returns by decreased turnover and higher rental value.


Note: lower ticketed items covered by the warranty services can typically be covered at a much lower cost than what you are spending







decreased turn over



you can in esses self fund the repairs you would have been paying to this company.


Your tenants will be happier because the response time will be quicker

Quality of work will be better


Better all around from a long term perspective




·         Their primary

·         Priority

·         Their priority is repairing covered items at a low cost rather than the livelihood and/or overall well being of the tenants and/or home warranty holder.

Ensure your tenant is provided with a safe, comfortable, ____ home as the one he/she signed a lease to live in.






Fine Print

Profitable business model

In the Business of making money








Tenant want a fast response time.

Huge and paramount to making your tenant happy

Take calls

Find vendors

Very slow


Use low skilled labor

They need to make a profit

They’re going to find the cheapest plumbers they can find to do this job so they can make the spread on the profit

They don’t use high skilled labor which can hurt you in the overall b


Their contracts have a lot of fine print.

Examples, the tenant forgot to change the service filter therefore it will not be cover the service call


They are not in the business of losing money

Business model that is very profitable

They are going to be charging you more than they pay out


Do it your self.



No pros


Highly recommend to take the money you would have spent in your annual/monthly premiums for a home warranty company and simply open a savings account.

Take the money you would have been paying on a regular basis to the company and just put it in an account every month, you can in esses self fund the repairs you would have been paying to this company.


Your tenants will be happier because the response time will be quicker

Quality of work will be better


Better all around from a long term perspective




It is the duty of the Landlord and CloverLeaf to provide a safe, comfortable and ___ home for tenants.








“No I don’t recommend purchasing home warranties at all.  I don’t buy extended warranties of any kind.  They are about 75% marketing cost, meaning commissions.  The other 25% actually covers the events, and if you would just bank (save) what you’re paying for that, you’ve got the money to cover what it would cover.  It’s not a good deal.” – Dave Ramsey