A common question we receive from real estate investors/owners is, “Should I use a home warranty company for my rental property?” They want to know if home warranty companies help to save money when it comes to maintenance and repairs.
Home Warranty Firms
In our professional experience, home warranty firms are typically slow to respond to repair claims. Tenants need and should expect a prompt response time when maintenance of a mechanical system is involved. If your tenant contacts you with a repair and you turn it over to a home warranty company, the sense of urgency you should provide your tenant may get lost as the warranty company searches for the cheapest vendor to dispatch to your property.
Home warranty companies use low skilled service labor. Home warranty firms typically seem to seek out the cheapest possible vendors to respond to fulfill their warranty contract. Customer satisfaction seems to be a lower priority because they do not often use the most respected service contractors. Not only does this mean you will have low skilled labor vendors conducting repairs on your property, but it opens you up to risk of the repair being done incorrectly or insufficiently. This can cost you even more money when it comes time to resolve the same complaint again.
Our experience has also been that home warranty contracts often have a lot of fine print they use as loopholes. One thing we have seen time and time again with clients who have chosen to use a home warranty company is that when issues arise, they are unexpectedly not covered, or cost an additional premium to satisfy the claim. For example, they may not cover a A/C repair, pointing to the fine print that your tenant forgot to change the air return filter as regularly as their contract requires. Or they may tack on an extra service fee in addition to parts when working with an older, appliance.
If you choose to work with one of these companies, be sure to examine the contract carefully and know exactly what is covered and the limits of their services before signing anything.
We believe that home maintenance is unavoidable. If you choose to work with a maintenance warranty, we advise that you work with local service vendors and contractors have a high customer serviced rating. Allow them to inspect your appliances or A/C systems and apply routine service schedules. This won’t be as inexpensive as warranty companies, but your investment will last longer and get serviced more appropriately.
Additionally, you and your tenants will enjoy a much better service experience with fewer surprises or aggravation. Trust is a major factor in delegating service to your property investment.
As always, the Berkshire Hathaway HomeServices - Coastal Real Estate team is here to serve as a resource for you. Whether you have questions on home warranties, or anything else related to property management or investing in real estate, our team is here to help! 843-232-0000
As a South Carolina real estate investor/owner, is it worth it to buy a home warranty?
Our simple answer is no. It’s important to remember that a home warranty is not synonymous with an insurance policy. There are better alternatives to handling maintenance for your rental property. Using Real Living is your best alternative to reducing maintenance stress and improving home maintenance issues.