Many investors wonder whether it’s worth it to get a home warranty for a rental property. There are pros and cons to home warranties, and today we are talking about what those are. We’re also making a recommendation.
Home Warranty: Pro
The upside to a home warranty is that it acts like any insurance plan. You pay a monthly premium and a service deductible when something covered breaks down. At that point, you’ll go through the process of dealing with vendors who will come and diagnose the problem and then either repair or replace the problem.
Home Warranty: Cons
There are some downsides to a home warranty plan. The major problem is that you are at the behest of the provider network that the warranty company uses. I have been a property manager for seven years and I have worked with and without warranties for all of those years. My recommendation outright is that a warranty is not usually worth your time and money. You won’t get the desired results. Warranty companies are for-profit businesses, and if they can deny your claim to save money, they will.
Vendors and Contractors
Warranties can be helpful if you have an unusual appliance. For example, in the Marin region, there are few to no appliance repair vendors working on Samsung. But, a warranty company will find you one when you file a claim on a Samsung appliance. However, that’s not the norm, and you will usually end up waiting longer than you should for vendors and contractors.
When you work with a property manager, you have much better access to great vendors. We have developed relationships with vendors in our area over the years. These cover many specialty trades and our owners benefit from these strong relationships and our preferred vendor list. So, while the prospect of a home warranty may seem cost effective in the short term, the long term result is excessive wait times, dissatisfied customers, and dissatisfied tenants.