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Is a home warranty for a rental property worth it?

Summary: If you’ve bought a primary home, you might have encountered home warranties. If so, you might have also wondered if it’s worth getting one for an investment property. In this article, we explain what home warranties are, how they work and our take on whether or not it’s worth getting one for a rental property.


[Disclaimer: We are not accountants, lawyers, or financial advisors, so please consult your own team of professionals about the topics covered in this article.]


When buying an investment property, one often debated topic in our community is, should we buy a home warranty. A home warranty may be one way to protect your investment. However, is it genuinely worth it?

What is a Home Warranty?

A home warranty is a service contract that covers the repair or replacement of key systems and appliances in the home. Unlike homeowners insurance, which protects against risks like theft, fire, or natural disasters, a home warranty is a safeguard against the normal wear and tear of appliances and systems.

How Do Home Warranties Work?

Typically, home warranties last for 12 months, after which they can be renewed. They often cover systems like electrical, plumbing, heating and cooling, and major appliances such as refrigerators, stoves, and washers. If a covered item breaks down, the homeowner submits a request to the warranty company, which then arranges for a service provider to assess and fix the issue. Depending on the urgency, it might take a few hours to several days for a professional to come out.

Pros of Getting a Home Warranty for a Rental Property

  • Financial predictability: With set premiums and known service fees, landlords can more easily anticipate yearly maintenance costs.
  • Convenience: Instead of sourcing contractors or technicians, the warranty company takes charge of coordinating repair services.
  • Peace of mind: Knowing that many potential problems can be addressed under the warranty can be comforting for property owners.

Cons of Getting a Home Warranty for a Rental Property

  • Delayed service: One of the major pitfalls is the time taken to fulfill warranty requests. As per landlord-tenant laws, property issues must be addressed promptly. Delays, especially with crucial systems like heating and cooling, can be problematic and potentially breach tenant rights.
  • Limited coverage: Not all systems or appliance issues might be covered. There may be caps on how much the warranty company will pay for a particular repair.
  • Extra costs: There might be situations where the landlord pays out-of-pocket for repairs, either because it exceeds the cap or because it’s not covered.
  • Quality of Repairs: The warranty company chooses the service provider, which might not always meet the landlord’s preferred quality standards.

Our personal experience with home warranties for investment properties

We have personally never bought a home warranty for any of our rental properties. The only time we did was when we had the seller buy it for us at the time of purchase. You might be wondering how we pulled this off.

We did by negotiating to have the seller buy us a home warranty as a condition of sale. This is also known as a seller concession. Sometimes, we’re successful in getting the seller to pay for it, sometimes we don’t. If it does work out, you can potentially save on some expenses down the road.

Did we ever use the home warranty? We had one instance when we used it to replace a dishwasher. Since a dishwasher isn’t one of those appliances that you need to address promptly, we were able to use the home warranty without feeling the time pressure. If it were a refrigerator, for example, we would have had to address it more promptly and probably wouldn’t have used the home warranty.

Our take on home warranties for investment properties

While a home warranty offers some appealing advantages, it might not be the best fit for rental properties. The main reason is the time it takes for the home warranty company to address issues that need to be addressed promptly because of landlord-tenant laws. If you’ve recently renovated your property, many of the brand-new installations and appliances come with their manufacturer warranties, reducing the necessity for an additional home warranty.

However, there are situations where it could make sense, especially as a seller concession. In such cases, the seller offers to pay for the home warranty as an incentive for the buyer. Before making a decision, weigh the benefits against the potential challenges and evaluate what’s best for your unique situation.

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Semi-Retired M.D. and its owners, presenters, and employees are not in the business of providing personal, financial, tax, legal or investment advice and specifically disclaims any liability, loss or risk, which is incurred as a consequence, either directly or indirectly, by the use of any of the information contained in this blog. Semi-Retired M.D., its website, this blog and any online tools, if any, do NOT provide ANY legal, accounting, securities, investment, tax or other professional services advice and are not intended to be a substitute for meeting with professional advisors. If legal advice or other expert assistance is required, the services of competent, licensed and certified professionals should be sought. In addition, Semi-Retired M.D. does not endorse ANY specific investments, investment strategies, advisors, or financial service firms.


Hi, we’re Kenji and Leti

we provide coaching and mentorship for doctors and high-income earners

Several years ago, we were newlyweds working as full-time hospitalists. On paper, it looked like we had everything: the prestigious careers, the happy marriage, the luxurious rental home, the cars, etc.

But in reality? Despite having worked for several years, we had very little savings. Despite our high income, we had very little freedom in terms of time or money.

One thing was clear: we had to do something.

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