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Do you ever feel like you’ve got it all under control and nothing can go wrong? No? Ha, me either. I made my first $2000 mistake in real estate.
About 2 months after purchasing our first property I received a maintenance request that the furnace stopped working in one of the units. We had just gotten home from our trip to Jamacia and Thanksgiving was around the corner. I was busy catching up with work and we had some super cold weather happening for November.
So, I did what was best at the moment and called a couple of local heating and cooling companies. Shortly after a couple of calls, I found a company that could make it out the first thing Monday morning to diagnose the problem.
First, the technician came out and diagnosed the issue. The furnace was was 30 years old and I was expecting it to be bad, but hopefully reasonable.
Secondly, the tech gives me a call with bad news. The blower motor was bad along with the main control board. Now, do you really think I knew what this meant? Not exactly. I went online like any millennial and learned about the parts of a furnace. Armed with my newfound knowledge of a furnace, I figured it was going to be a costly repair.
Next, I receive a call back with quotes to replace the broken parts or fully replace the furnace. The cost of the repair was $1,200 and to replace the entire unit was $2,750.
Decision to make
Above all, the most important thing was to get heat up and working as soon as possible.
In short, the best decision was to replace the unit. The new unit would be more energy-efficient and it would provide peace of mind for a longer period of time. For example, what if something else went wrong with the old unit and I was out another $1,200?
Where I went wrong
Now, the investor we purchased our first property from was keen on home warranties. Let’s backtrack and take a look at what I wrote days before the furnace broke:
He included a home warranty with our purchase and I even forgot to write about it!
Cost of my mistake
Afterward, once the dust settled and the holidays were upon us, I gave the home warranty company a call to see if there was anything I could recoup after the furnace had already been replaced.
Sadly, there was not. They informed me that they require a full diagnosis with photos before agreeing to repairs. Swallowing my pride, I asked the warranty company for an amount I would’ve owed had I gone through their program. They listed off a couple of things I would’ve been responsible for and then gave me a whopping total of:
Instead of paying $2750, I would’ve only been out of pocket $750…
Don’t mind me, I’ll be out by the fire watching my $2000 burn.
Keep better documentation! The only documentation I had originally about the home warranty was an email confirmation during the purchase process. What had I done with that email? Nothing! I filed it away like it was junk, thinking– I’ll never be able to use this anyway.
I now have a property notes document for each unit we own individually. On that page, I list the major appliances along with their age and make notes of any warranties and dates of repair/replacement.
In conclusion, it wasn’t the end of the world. The tenant was happy with a speedy repair and I was out some money. I need to make these mistakes in order to ensure I won’t make them (or larger ones!) in the future. It’s all part of the learning process.