Every homeowner has had one of those “rainy days.” A burst pipe, a faulty refrigerator, or worse, your AC going out can upend your entire week. If you’re an Atlanta landlord, these rainy day mishaps disrupt your business. They make your tenants unhappy and can lessen your flow of profit.
For many property owners, a home warranty is where they turn. Out of over 5 million homes sold in 2020, approximately 25% of them had a home warranty attached. If you are a landlord considering home warranty coverage however, you’ll want to think twice. There are some crucial caveats that can affect landlords negatively.
Understanding Home Warranties
A home warranty offers a different kind of coverage for your property than landlords insurance does. Home warranties are designed to cover you in the event of damage from typical usage. This includes parts of the inside of the home, such as functional components or kitchen appliances. Home insurance covers damage from larger events such as hurricanes.
Home warranties cover a wide array of parts needed in the home for day-to-day life. The kitchen and bathroom are the two most common. Coverages can include everything from dishwashers and refrigerators to plumbing systems. Some other common appliances covered include washing machines and water heaters.
Challenges of Using Home Warranties for Rental Properties
Having a home warranty can be a good idea for an owner-occupied property. You might even have one on your own home. On the other hand, when owning a rental property there are several factors that make it a hassle. These include:
Limited Coverage: The coverage included with a home warranty comes with a laundry list of conditions that are not covered by the warranty. This can include specific parts of your HVAC system or plumbing, pre-existing conditions, and problems arising from failed maintenance.
Many times, this leads to wasted time on calling a warranty representative to come check the unit just to find out it's not covered. You are then left to repair the issue out of pocket anyway and you have an unhappy tenant on your hands.
- Service Limitations and Delays: In the business of rental properties, time is money. Slow response time to a maintenance issue lessens your tenant’s satisfaction and risks your property value. Home warranty companies can have notoriously long wait times for maintenance fixes. Added to these long wait times is the struggle to coordinate time between your tenant and the representative. You need more efficient maintenance strategies than what a warranty can offer.
- Cost Considerations: Just like a standard insurance policy, a home warranty is going to come with its share of costs annually and at the time of repairs. It’s important as an investor to weigh these against the cost of out of pocket repairs. Annual fees will be there regardless. Then you have deductibles and hidden fees on top of that. These costs add up quick and can deduct from any savings you might see by having the warranty.
- Costing Landlord Time: Landlords already have to deal with a large number of time commitments. Just like with insurance, a home warranty is going to further sap your time with complicated service center calls and online tickets. This problem becomes worse if a refusal for a claim turns into a dispute.
- Potential Tenant Loss: As discussed, the potential for delays from limited coverage or slow response time can negatively impact your tenant’s outlook on the property. The biggest bottom line that a home warranty can cost you is your tenants. Disgruntled tenants are less likely to resign a lease and might even decide to break lease early if a maintenance issue is left to fester.
Importance of Timely Repairs in Rental Properties
Our property management team has 2 decades of experience working with Atlanta rentals. The biggest piece of maintenance advice we can give from all of that is to be prompt and proactive with your maintenance work. Home warranties will make your maintenance anything but prompt. Letting maintenance issues sit can quickly cause a snowball effect for your business.
It can also cause legal problems for you as well. As a landlord, you have a legal obligation to keep your property to a certain standard of habitability. Waiting around for a warranty can cause your property to fail to meet these standards, costing you more than just a tenant.
Delays from your provider can hurt your property just as much as your tenant relations. Serious problems with plumbing or electrical can cause permanent damage to your rental that will alter your future property value. It can also make your property less attractive to future tenants. Successful property managers protect the property better than a home warranty can.
Alternative Strategies for Maintenance and Repairs
Rather than depending on a warranty middleman to solve your rental’s maintenance needs, it’s preferred that you or your property manager have a game plan for maintenance. Performing preventive maintenance on your rental’s important internal systems is key. Regular property inspections are how you achieve this. This will minimize maintenance needs through proactive care for your property.
When you do have a needed fix or emergency need, you still need someone to call. This is something you can prepare for by having a thoroughly vetted network of contractors. When you have an expert on the job, the problems will be fixed quickly with superior craftsmanship. A property manager can help you negotiate on rates.
Preferred Care for Your Rental Property
Every landlord is going to have that occasional crack in the foundation. A busted pipe or a broken appliance can completely disrupt your tenant’s way of life. Relying on a home warranty to fix it will only prolong the disruption. But with your own internal gameplan, maintenance becomes a breeze. Consider a property manager like PMI Georgia to help you form that gameplan.
We put ourselves in the shoes of every owner we work with to ensure that their needs come first. PMI Georgia is an Atlanta-based property management team with a client-first mindset. You won’t ever have to worry about a maintenance need again thanks to our responsive team running your rental.
Contact our friendly team of professionals anytime!
