We often have property owners approach us regarding whether or not they should purchase a home warranty to protect their rental property. Over many years of managing rental properties, we have noticed some trends that tend to come up when dealing with home warranties. When deciding whether or not to purchase a home warranty for your rental property, it is important to consider these items.
When home warranty products originally came on the market, they were initially designed to benefit the homeowner living in the property. Ideally, the person encountering a maintenance issue lived in the property, and they alerted the home warranty company. Then the home warranty company sent out a vendor who restored service to the home. After service was restored, based on the coverage in the home warranty, the warranty company determined whether the homeowner pays for the repair or the warranty company covers the cost of the repair. This system normally has worked well for homeowner-occupied properties, but when it comes to tenant-occupied properties, home warranties often get in the way of providing excellent service to tenants regarding maintenance issues. Remember: the number one reason that tenants leave a rental property is that they are not happy with either the timeliness of repairs or how maintenance issues are handled. So, handling maintenance calls from tenants is extremely important.
Since home warranties were originally designed to benefit the homeowner living in the property, home warranty companies are not necessarily interested in providing immediate service or ensuring that the repair is done as quickly and efficiently as possible. The home warranty company and their vendors may have more lax timeframes than a tenant would like them to have, and they may not get to the tenant’s repair call as quickly as possible. So, when a tenant is living in a home with a home warranty in place, we often find that the tenant becomes frustrated with their maintenance services. For example, especially during the warm summer months, a tenant does not want to wait five or six days for a vendor to come out to fix their air conditioning unit.
Another issue we’ve experienced dealing with vendors from home warranty companies is that often they just want to quickly repair a problem without getting to the root of the issue. Instead of solving the cause of the problem, they’ll simply implement quick fix after quick fix. While this may be in the best interest of the warranty company, a tenant can become frustrated if they must keep calling in week after week to report that they have no hot water or that their dishwasher is not working again.
Because of these concerns, when shopping for home warranties, it is essential to find a home warranty company that is geared towards dealing with tenant occupied properties. Although there are only a few home warranty products like this on the market, we strongly suggest finding a product geared towards rental properties if you are going to put a warranty on your property. Other than these types of products that are geared towards tenant-occupied properties, we do not recommend purchasing a home warranty product for your rental property. In our experience, doing so makes it more difficult for a tenant to get their repair needs met, and ultimately causes the tenant to leave your rental property due to their frustrations with maintenance.