One of the hot topics in the property management industry is home warranties, and whether they’re a good idea. This is also a popular question among investors and property owners. Sometimes, people will call and ask us if they should buy a home warranty for their rental property. We want to talk about the challenges that are present with home warranties on today’s blog.
Home Warranties for Owner/Occupants
When home warranty products first came onto the market, they were designed to benefit homeowners who lived in their properties. If someone needed a repair at their home, the warranty company would send out one of their contracted vendors, and that vendor would work on the problem. Then, it would be decided whether the repair was covered and paid for by the warranty company, or whether the homeowner had to pay for the repair.
It worked well for owners who were also occupants. You have a little more flexibility when it comes to timelines and vendors. But, when a tenant is living in the house, home warranties can get in the way of providing great service to your tenants.
Timeliness of Repairs and Maintenance
The number one reason tenants leave a property is because they are not happy with the timeliness of maintenance and repairs, or they don’t like the way those maintenance and repair issues were handled. Handling rental property maintenance calls is important, and home warranties don’t always get it right. That’s because they were originally designed to benefit homeowners living in their own property. Warranty companies are not interested in responding immediately or making sure the repairs are done quickly and efficiently. Their timeframes are more lax. This will be a problem for you when you have tenants who expect that their needs will be met right away, especially when it comes to maintenance.
So, when you have a tenant living in your property and a warranty is in place, the tenant may get frustrated. When vendors don’t come out for several days to address problems like air conditioning, we run into trouble. It gets warm in South Carolina in the middle of summer, and air conditioning repairs need to be made as quickly as possible.
Making Band-Aid Repairs
A lot of times, home warranty companies will just want to Band-Aid the problem. They’ll keep coming out rather than getting to the root cause of the issue and solving it completely. That might be in the best interest of the warranty company, but the tenant will have no patience when the hot water stops running and the air conditioning continues to break.
If you’re going to use a home warranty, select a product and a company that is geared towards tenant-occupied homes. Otherwise, we don’t recommend that you buy one for your rental property. Our experience is that warranties only make it more difficult for tenants to get their needs met. That will lead to tenant turnover.
If we can be of assistance with your rental properties, please contact us at New Heights Property Management.