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A legitimate question for rental property owners, should you use a home warranty company to protect your investment property. There are four main considerations to note before making a decision.
- They use cheap labor.
Plain and simple, home warranty companies hire cheap labor to do repairs. Why? Because they charge you upfront. The model is set against you because they have no real reason to hire high-quality repair vendors to maintain your property. Offering top-notch work isn’t advantageous to the home warranty company’s bottom line therefore you can expect customer service to suffer.
- They aren’t usually fast in response time.
As an investment property owner, one of your top priorities is keeping your tenants happy. If you have a great tenant in your property, you will do everything you can to keep them. Unfortunately that is not the case when it comes to home warranty companies. Again, because they are paid upfront, they don’t have to be fast when responding to issues at the property. They tend to take an attitude of, “I’ll get to it when I get to it.” When something breaks at your property, your tenants expect you to handle it quickly. If they don’t get a fast response time, they may decide to vacate when the lease term ends.
- They have minimum charges.
Most home warranty companies charge a service fee every time you call with a problem and often don’t cover typical repairs. Read the fine print and understand what is covered in your premium before making a decision.
- They are not in the business of losing money.
Home warranty companies are in the business of making money and that means they make more money on you than they will spend on you. It’s a flawed business model when it comes to offering quality customer service.
For these reasons, we recommend self-insuring rather than leveraging the services of a home warranty company. Put the money you would have spent on a home warranty to the side in a separate savings account. When the time comes to replace your rental property’s refrigerator or hot water heater, you will have cash on hand to cover the cost. Due to the lack of positive past experiences with home warranty companies on our own portfolio of Broomfield and Thornton rental properties, we advise landlords to use caution when making the decision of using a home warranty company on their own investments.
Have questions? Give us a call for any of your property management needs. 303-255-1990