A lot of homeowners have a warranty on the home they live in, and it works out pretty well. It can protect some of your more expensive appliances, keep you from having to pay high repair bills when one of the systems in your home breaks down and ensure your home remains comfortable and in good condition.
It seems natural that the same benefits should apply when we’re talking about your Portland rental property.
However, it’s a little different, and that’s because you’re not living in the home yourself. A tenant is living there, and that means there are habitability standards that must be met and tenant expectations around maintenance and repairs that will influence whether they renew the lease agreement or leave you with a vacancy.
We get a lot of questions about home warranties.
We know you’re interested in keeping maintenance and repair costs down. It’s an important part of building a strong return on your investment. And, there are many good things about home warranties. However, you’ll find that most Portland property management companies advise against a home warranty.
Local property managers know that these warranties won’t do much for you when we’re talking about an investment property. When residents are involved, there’s a sense of urgency that isn’t always present when we’re talking about your own home that’s occupied by you and your family members rather than a paying tenant.
Warranties can actually cost you more time and money, and they often lead to frustration for you and your residents.
Based on our experience, we run into problems with home warranties in the following ways when we’re managing Portland rental homes:
Communication from the warranty company is often lacking.
There’s no sense of urgency to get the work done or even to have the problem diagnosed.
Vendors don’t always impress us, and we prefer to work with our own.
We will work with owners who have a warranty in place. This is part of the service we provide. However, if you own Portland rental properties and you’re trying to decide whether or not to buy one, we recommend against it.
Here’s why.
Home Warranty Companies and Communication Problems
Most people will buy a home warranty expecting that when something in the property breaks, the warranty company will replace or repair it – at no extra cost because the warranty has been bought and paid for. Maybe that’s the way it seems like it will work. However, that is not always the way things will go. First, you’ll have to get the home warranty company to be responsive.
Bad home warranty experiences start with bad communication. Warranty companies will often be slow to respond when a claim is filed. We’ve also noticed there can be a lack of transparency between the warranty company and everyone involved; the property owner, the property manager, the residents, and the vendors.
It’s possible that you’ll have to wait two or three days just to get a vendor from the warranty company out to assess the problem. Having a vendor come out does not necessarily mean that the problem will be fixed in those days, however. The way the warranty works is different. It requires an assessment and a recommendation, and then the warranty company will decide whether the repair is covered and how much will be paid.
This can be problematic; not only the wait time but also the fact that there isn’t always a clear timeline of what will happen.
When you’re working with a home warranty company that’s slow to respond, you could potentially run into some trouble. Here’s an example: if your resident calls to tell you that the water heater is leaking and it takes the warranty company two days just to send someone out to diagnose the problem, your resident is not going to be happy. They’re also not going to have hot water.
That’s a habitability issue. The process is often a little longer when you’re working through a warranty, so there may be a longer wait ahead, too. The vendor has to let the warranty company know what the problem is, and then they have to get approval from the warranty company to make the repair. This will not help your tenant retention plans. It could also cause additional damage to your property.
Repair Delays and Home Warranty Plans
Safe and habitable Portland rental properties are non-negotiable for property owners. You have to provide a well-maintained property for your tenants to rent. As property managers, we prioritize responding to maintenance concerns and repairs, whether they’re emergency issues or routine problems. We make maintenance a priority, and we can do that when we have control over how maintenance is reported, responded to, and managed. When we have to work through a warranty company, we have less control and a lot less authority.
Warranty companies do not move as quickly as your Portland property management partner.
And that’s a problem because waiting for a home warranty company to complete work in a timely manner will damage your relationship with your residents. It could potentially put your property at risk as well. While we cannot speak for all warranty companies, the problem we have with them is that they do not work quickly, and there is no sense of urgency to respond to your needs. They do not have the same responsibilities to your residents that you have.
As you know, providing a great customer experience is one of the most important things you can do when renting out a home. With habitability issues come legal issues.
Tenants have a right to live in a home with heat. They need running water and safe electricity.
Making them wait for repairs that could be taken care of by our team of vendors in a day or two is not a great way to do business.
Choosing Vendors to Work on Portland Rental Properties
We pride ourselves on working with the best vendors and contractors we can find. We have established relationships with these professionals, and we benefit from their attention to our properties and their preferred pricing. They’re licensed, insured, and excellent at what they do.
Unfortunately, the vendors a warranty company will send over are not always the best. Their job, when they’re working for the warranty company, is to complete the work as cheaply as possible. That can lead to faulty or incomplete work. Using vendors who charge less is a great way for home warranty companies to save money, but it’s a terrible way to protect the condition of your investment.
The vendors that your home warranty company sends over will not always meet our standards.
Scope of Work and Warranties
Many of the home warranties we have seen and worked with are limited in scope and do not cover a lot of what you may need.
This is not a surprise you want to encounter when you’re expecting your warranty to cover something at your rental property.
You pay an annual fee and you meet your deductible and you’ll often pay a service charge just to get a vendor out to look at the problem. So, you expect the warranty to take care of any repair that’s needed at your property. But, that’s not always going to happen.
You have to read your policy thoroughly to understand what it does cover and what it does not cover. It’s possible you’ll end up paying for the diagnosis only to find out that the repair is not covered.
Deciding to Buy or Not Buy a Home Warranty for Portland Rental Homes
There are still a few circumstances in which you might be well-served by a home warranty for your rental property. It’s not for everyone, and if you’re working with a great property management company that pays attention to preventative maintenance and has great vendors in place, you may not need one.
Here’s what to ask yourself:
How old is your home? Older properties are more likely to have systems that are likely to wear out. If you’re renting out an aging home, a warranty might make sense.
Are you willing to invest in a good home warranty? When you buy a basic policy, they don’t cover a lot. Sometimes, you’ll get the cheapest home warranty that’s out there, and you end up spending more money. You’ll end up paying for all the things that aren’t covered.
Have you read the fine print? You have to be sure you understand what you’re paying for when you buy a warranty. You have to know what it covers, but more importantly, you need to know what it excludes.
Unless there’s a very compelling reason to invest, we recommend you focus on good maintenance and professional property management instead of a home warranty for your rental home.
Would you like to talk more about this? Please contact us at PropM. We’re open 365 days a year and seven days a week, and we’re happy to help you.
