Managing Your Property
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback
Home Warranties for Rentals - Love or Hate?
Hi Fellow BP Fans,
For those of you familiar with home warranties, what are your opinions on having a HW on each rental property annually? Here in Utah they cost between $400-600/yr and, when not trying to wiggle their way out of service requests, do cover a lot of items that tend to fail much more quickly in rentals than in personal residences.
Thanks,
I don't like them. Many property managers will not manage a property with a home warranty. Those companies are often slow to respond, use the cheapest vendor possible, and don't cover what you think they will cover. I'm in a small town with only a few appliance techs. Only one of them will accept these jobs and he is paid about 60% of what he would normally charge, so every warranty call is a loser for him and gets shuffled to the bottom of his list. He only keeps the gig because it earns him referrals for other work that pays a fair wage.
Personally speaking, I am not a fan. I think most of the time people forget that they even have a home warranty in the first place. In addition, your tenants will need the furnace, water heater, or whatever is broken fixed in a timely manner. Which in my experience home warranties aren't capable of doing.
On a new home, the builder includes a warranty. Most things go wrong on a home/appliances in the first year and then after year 7 or 8. So from year 2-7ish...I'd say you could get away without a warranty.
Quote from @Nathan Gesner:
I don't like them. Many property managers will not manage a property with a home warranty. Those companies are often slow to respond, use the cheapest vendor possible, and don't cover what you think they will cover. I'm in a small town with only a few appliance techs. Only one of them will accept these jobs and he is paid about 60% of what he would normally charge, so every warranty call is a loser for him and gets shuffled to the bottom of his list. He only keeps the gig because it earns him referrals for other work that pays a fair wage.
That's crazy that a property manager won't manage with a warranty! We leave it open to the owner to opt in to get their own. It's up to the owner to check what's covered.
@Brad Jacobson
I don’t like them for rentals. As others have said, repairs are not made on a timely basis and the HW company usually tries to wiggle out of covering expensive items such as air conditioning.
@Brad Jacobson I just had my first experience with a home warranty, and it's on a STR in Florida we purchased back in August. My PM is great, but it's really hard for him to coordinate repairs (we've had two calls on a refrigerator) and times with guest stays. The HWA (Home Warranties of America) warranty covers a lot, but I pay $100 each time I want a technician out. Once paid for, the repair labor, part, etc. are all billed to HWA, so that is nice. However, we only get to work with their preferred vendors, and the current one we are dealing with out there is OK, but very difficult to communicate with.
The example here - our large french-door refrigerator keeps tripping the breaker, so the guests have to go flip it back on or their food spoils. The strange thing is, it doesn't trip all the time, so the repairman said it needed a new compressor. They replaced it once, but the breaker kept tripping. I had a larger breaker installed (it seemed small to me to run a large appliance like that), but that didn't help either. Calling HWA, I wanted them to pay for a replacement fridge, but they needed a written explanation from the service provider. The service provider said they repaired the appliance and all is good, even though I told them the breaker is still tripping.
Well, to make sure our guests still have good food to come home to, we bought a new fridge (I can't get HWA to pay for it), and we are still trying to fix the old one, now out in the garage. But following a second $100 call (two separate incidents according to them), they are replacing the compressor again, which I am guessing won't solve the problem. Either way, I'm glad I haven't had to pay for the parts or the repair, but you can see the difficulty here. Ours is an unusual scenario, and I keep hoping the A/C unit will go out before our warranty expires so I can get a cheap replacement :).
Hope this helps!
I got a home warranty on my first two rentals and then never used them once. I don't get them anymore but I have heard a lot of people using them to their advantage.
#3 1031 Exchanges Contributor
- Investor
- Las Vegas, NV
Please click on the magnifying glass in the upper right. This it truly asked monthly if not weekly.
These warranties will PROBABLY cover repairs where your $75-125 deductible within a week or two. But when your tenant doesn’t have ac or heat or hot water for a couple weeks while they wait for approval and then shipping on a part that should mean the end of the device. But it’s cheaper and the warranty company makes the call. This of course is compared to you fixing/replacing the problem within hours. Instead your property is uninhabitable and you have to put them up somewhere else.
Just don’t.
+1 Hate
@Bill B. makes some good points - if I were warranty-ing my own purchase, I could likely live for a few days without A/C etc. while the warranty takes care of business. But with renters, particularly STR (they're only in the home for 3 - 14 days, and a warranty claim will likely never be resolved in that time window), you have to act quickly.