1st 4PLEX buyer: home warranty company in Mesa, AZ?

Question

Hello, I'm looking for a good home warranty company for my upcoming 4 PLEX in Mesa, AZ. Any recommendations?

Also, any key things I should consider during my screening for a good warranty company?

Thanks,

Vibhu Arya · Answer

Thank you, I have been recommended oneguard by someone else as well and am considering it!!!

Another question: I have been thinking of adding $70 service call fee to be paid by the renter in the renters's contract and the renter can contact homewarranty company directly for repairs. Have you seen it work?

Ryan Swan · Answer

@Vlibhu Arya You'll learn how to handle tenant requests and what is reasonable over time and with experience. A competent property manager like @Doug McVinua can also help advise along the way.

I have seen some leases with wording such as "Tenants responsible for repairs maintenance under $50...", or "tenants responsible for minor property upkeep and maintenance". Frankly, I think both types of wording are vague and generally too difficult to enforce.

What if a shutoff valve is leaking under a sink? Was it any fault of the tenant that your shutoff valve started leaking? Can you prove they broke it? That part is about $10 at the hardware store, and a homeowner or handyman can install it in about 15 minutes. Do you really want the tenant making this repair, that if done incorrectly, could actually cause further damage? I prefer to have my own people make all repairs so that I know they're done correctly.

I think all property repairs should fall on the landlord. It's their property and their responsibility to maintain it, unless there is a cut and dry case that the tenant caused the damage. Then it is up to you to decide if you want to bill the tenant now, or wait and charge against their deposit at move out.

Vibhu Arya · Answer

Thank you for all your suggestions. Very much appreciate it!

Seller is buying the home warranty for the 1st year so I think I will get the 1st hand taste of it:)

Steve Rozenberg · Answer

@Vlibhu Arya

Should I or Should I not get a Home Warranty for my rental?

We prefer that the owners do not use a Home Warranty Company to make repairs at their rental property for several reasons I will explain below.

There is a HUGE problem in the home warranty industry and the public is becoming savvy to it.

Try searching Google with the name of your favorite home warranty company and the word `complaints' or `fraud'. You will be amazed. Find out how many people feel like they got burned, turned down wrongfully or got seriously bad service.

It seems like almost Every time we call a home warranty company for a problem, they deny the service either on grounds of lack of maintenance or abnormal wear and tear. How do you define abnormal wear and tear and lack of maintenance? When it comes to exclusions and small print, warranty contracts say a claim can be denied for lack of maintenance, improper maintenance, improper installation, pre-existing problems, code violations and numerous other reasons.

Warranties are typically purchased by home sellers or their real estate agents to avoid lawsuits if something breaks in the first year. Not to be confused with a builder's warranty, a so-called home warranty -- Actually a service contract -- is typically purchased for existing homes, especially homes sold by real estate agents. These service contracts generally cost $300 to $600 for a year-long basic-coverage plan that includes items like ceiling fans, water heaters and furnaces.

The contracts come with loopholes. You need to carefully read your service agreement to determine what is and what isn't covered. Coverage for plumbing for example, typically ends at your home's foundation, so leaks or breakages beyond that would be your responsibility. "Pre-existing" problems typically aren't covered, nor are breakdowns that result from poor maintenance or improper installation. The contract also may require that a system be upgraded to current building code standards -- at the homeowners expense -- before they agree to consider repairs. People who have had problems with the home warranty companies say that the more expensive the repair or replacement, the more likely home warranty companies are to invoke these exclusion clauses.

You don't have control over who does the work. The home warranty provider contracts with local service companies to perform the actual inspections and repairs. You don't get to choose and scheduling repairs can sometimes be a trial. The service technician may also try to sell you unneeded services.

We have had hundreds of problems with home warranties with owners that have them when they have us manage their properties.

We had a bathroom faucet go on the blink; we called the Home Warranty Company. After paying the $55 deductible, their contractor refused to make the repair. So we had our plumber go out and they made the repair for $65. We have experienced this over and over where the owners are spending money on deductibles and then we have to send out our maintenance people to fix the problem.

On another property, a dishwasher repair was needed. The home warranty company took 3 months and had make 15 trips out to the property to repair the dishwasher. If you were the tenant how would you feel?

On one property the A/C went out in the summer and it took 21 trips and 3 months before the warranty company finally replaced the A/C. You can be sure the tenants moved as soon as their lease agreement was up. Other tenants would have gotten an attorney and been suing the owner.

Often they will leave tenants hanging without heat or A/C for days while they go through their "second opinion" process. If, as a property manager, I wanted to damage my reputation with as many tenants as possible by providing the lousiest repair service possible, I can't think of a better way to accomplish that than by using a warranty company on all service calls. They simply are not compatible with the level of service we demand of our vendors.

Tenants have more rights now than they ever have had in the past and Judges are normally on the side of the tenants. If repairs are not made timely, owners can find themselves on the wrong side of the legal system. It is hard enough to try to use a home warranty on the home that you live in. It is not cost effective or practical to use a home warranty on a rental property.

Doug McVinua · Answer

@Vlibhu Arya Proper and professional Property Management encompasses a wide range of tasks including requests for repairs. I'm fortunate to have a very mechanical background with decades of housing experience so I can generally diagnose a situation pretty well before we spend money. Once we are aware of the real issue at that time we dispatch the appropriate vendor to resolve the issue.

I think it's important to manage the requests carefully so that we don't get taken advantage of by a tenant or a vendor and or let an issue get worse that in the end costs the owner more than it should have.

Some property managers assign your property management out to a staff person that may or may not have the needed experience or knowledge to manage effectively. I have assistants for certain tasks but the repair side is something I'm almost always involved in as it requires more mechanical knowledge.

Good questions! When are you closing and have you reviewed all of the leases, deposits etc?

Vibhu Arya · Answer

Thanks for details. The key is how do we manage - 'tenants that are difficult and we decline maintenance requests that aren't reasonable or necessary'?  OR charge them $70 for such requests?

Would you recommend a provision or some sort of wordings around it? OR are you saying lets completely forego it & just manage it.

Doug McVinua · Answer

@Vlibhu Arya In regards to your question of charging the tenant $70.00 for a service call fee I will answer with 2 aspects.

1. Charging the tenant $70.00 for a Service Call fee will save you the owner money short term.

2. Charging the tenant $70.00 will cost you, the owner much more long term. Why will it cost you, because the tenant will report very few issues? In the end, the tenant will leave (most likely unhappy due to unrepaired stuff) and you the owner will receive a property back with deferred maintenance. Some of the deferred maintenance may cause other issues that actually create far larger issues. Example, tenant sees a minor/slow leak under one of the sinks, knowing this will cost the tenant $70.00 said tenant decides it's only a small leak and lets it go. The sink still works fine, why report and pay the $70.00. Small/slow leaks are actually a really good pathway to mold that can run thousands of dollars to remediate should it be left to grow into the cabinets/walls etc. Many of the items will not be so dramatic but in the end, the tenant will leave and your money will be spent fixing those items that went unreported before the next tenant moves in any way. You end up spending the money later (a good thing) but most likely it sits vacant longer, attacks a lower quality tenant because it has issues and in the end, I think you lose money.

Of course, we can write provisions into a lease that demands the tenant report issues (already in my lease) but in the end, many will go unreported. The tenant sees the $70 as a negative, something to avoid.

As a Property Manager, I do inspections, stay in contact with tenants, etc and find it's better to keep them reasonably happy. A reasonably happy tenant is more likely to be a good tenant, renew the lease and care about the property. Lease renewals tend to result in much higher overall revenue for the owner and to me, that's what this is about. Of course, some tenants are difficult and we decline maintenance requests that aren't reasonable or necessary.

My fiduciary is to the owner of the property and sometimes that's protecting a well-intended owner from actually hurting themselves. Yes, some Property Managers will tell you what you want to hear, I tend to tell you what you should hear and if that's valuable we have a very long term relationship. Yes, I see how the thought of charging the tenant the $70 is appealing but in the end, I believe it hurts you and I want to be in this game for the long haul.

Julie Dunlap · Answer

I’d second what Doug said and just put money aside for when things break.

If you’re really set on getting a home warranty I recommend OneGuard to all of my clients. I’ve used just about every warranty company out there and these guys are the only ones that don’t make you jump through hoops to get items replaced.

Doug McVinua · Answer

@Vlibhu Arya To be completely frank I would consider skipping the Home Warranty and just put the funds in reserve unless you are really tight on reserve funds to cover a major repair.

As a Property Manager with multiple Mesa properties, I deal with multiple Home Warranty companies. It's hard to get them to respond timely and then they always have extra charges and fees. They often try and get out of paying for much by having extra charges for uncovered items etc. I recently had a water heater fail (leak) and the contractor wanted to charge the owner(CA) hundreds of dollars for upgrade fees, disposal, etc, I got them to give us a $400.00 cash credit and hired my own plumber to install a new water heater for about $600.00. Got it done faster and cheaper in the long run.

The only thing that seems to pay off is sometimes the HVAC coverage works out. If you have Roof-Top units they are about $3500 replaced and the right Home Warranty coverage can help.

I know this is not a real positive recommendation but all I can do is to be truthful with you about the real world of investment properties and home warranty coverage.

Always ready to help, answer questions and or assist you in any way.

1st 4PLEX buyer: home warranty company in Mesa, AZ?

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