Many property owners who rent out their investment properties wonder if buying a home warranty is worth the money. Like any policy you would buy, or a car you might purchase, the devil is in the details. You have to figure out if it is worth it. Your home warranty might save you money, but it could also end up costing you more money than you realize. There are three important things to consider when it comes to home warranties and the companies that provide them.
1. How fast does the home warranty company respond? If a tenant calls with an air conditioning problem in the heat of the summer and it takes your warranty company two days to respond to the problem, you can expect complaints from your tenant. There are habitability issues to be considered as well. Home warranty companies will likely not be concerned with your property’s habitability. They are like insurance companies and it will take days, not hours for them to process your claims. Certain policy restrictions that they have in place will also affect you, and might be bad for your tenant retention. The money you could save with your warranty might be lost when you find yourself with a vacancy because your tenant moved out.
2. Does the warranty company know your property is being rented out? Find out what this means for the warranty and the ease with which claims can be filed. You will want to know if it’s possible to file a claim online, and whether the process is easy or time consuming. If there is not an online option, you or your property manager will need to be prepared for filing a claim on the phone. Sometimes, this can take hours.
3. Remember that a home warranty is not designed to maintain your property. When you buy a warranty on your car, that warranty policy does not cover you when you need new brakes. Even if you invest in a home warranty, you will still be responsible for the upkeep and repair of your basic and long term household maintenance.
There are many good reasons to get a home warranty, but also many potential problems that you need to consider. Make sure you are well-informed before you buy a policy, and you know exactly what it covers and what the claims process entails. If you have any questions about home warranties and whether they might be good for your property, please contact us at Blackbird Realty.