What’s your reasoning behind buying the home warranty and budgeting $100/mo for repairs?
Chris,
I know that you want an answer from Michael and I am sure he will provide one shortly however, if you don’t mind my weighing in I think I have some insight.
The warranty is $450/Year and budgeting 100/Month equates to 1200/year leaving you with a surplus of $750/Year. Assuming that you don’t need to utilize the “Home Warranty” during a tenants one year lease term you have 750 dollars to cover any necessary deductibles on turnover as well as extra “Reserves” to cover other costs not covered by your home warranty. It’s a good idea unless someone is the type of investor that does not budget for reserves.
@eric, I couldn’t have said it better, nice job …
It makes sense and I like the idea. I do set aside 10% of gross rents for maintenance and repairs on all my properties, but I’m just trying to figure out if this method would be more cost effective for me. Is this what you do? And have you found it to work well?
Chris,
At this point we do not use the home warranty to cover “big ticket” items. However, as I read the post this is something that I will likely add to our business plan as our portfolio grows. As of now we operate a small portfolio under 10 SFRs I just happened to appreciate Michael’s inclusion of the Home Warranty and it is something that we may begin to implement to prove out the concept.
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What’s your reasoning behind buying the home warranty and budgeting $100/mo for repairs?
Chris,
I know that you want an answer from Michael and I am sure he will provide one shortly however, if you don’t mind my weighing in I think I have some insight.
The warranty is $450/Year and budgeting 100/Month equates to 1200/year leaving you with a surplus of $750/Year. Assuming that you don’t need to utilize the “Home Warranty” during a tenants one year lease term you have 750 dollars to cover any necessary deductibles on turnover as well as extra “Reserves” to cover other costs not covered by your home warranty. It’s a good idea unless someone is the type of investor that does not budget for reserves.
@eric, I couldn’t have said it better, nice job …
It makes sense and I like the idea. I do set aside 10% of gross rents for maintenance and repairs on all my properties, but I’m just trying to figure out if this method would be more cost effective for me. Is this what you do? And have you found it to work well?
Chris,
At this point we do not use the home warranty to cover “big ticket” items. However, as I read the post this is something that I will likely add to our business plan as our portfolio grows. As of now we operate a small portfolio under 10 SFRs I just happened to appreciate Michael’s inclusion of the Home Warranty and it is something that we may begin to implement to prove out the concept.