Home warranties can be interesting when it comes to your rental property. A lot of property owners are big proponents of warranties, and that’s fine. I’m not for or against them. It is important, however, that you understand what’s in your warranty so you can be sure you get what you’re paying for.
What Warranties Cover
Your rental home warranty may cover HVAC systems only, or just the major plumbing in your house. You have to go down the list of warranty items and see what’s covered and what’s excluded. It’s also important to find out if the company is solvent. I’ve had homeowners pay for a warranty, and then three months later the warranty company is out of business. There’s not a lot of money being made in the warranty business, so make sure you work with a stable company.
Work Timing and Quality
You also need to understand what type of work they do and what their quality of work is. The warranty company dictates who does the work. So, you don’t have a lot of control over timing, the quality of work and all those things associated with repairs. I like to hire my own contractors to work on my rental investment because I have a list of people who I know do good work in a timely manner and for a fair price. You don’t have a lot of control when you work with a warranty company.
Making the Warranty Decision
A lot of our owners have warranties and they like them. A lot don’t have warranties, and they do just fine as well. We have some local companies in the area I can recommend if you are interested. What’s most important is that you remember that there are limits to what they cover and do. They might cover electrical repairs but not code upgrades, for example. So maybe you’ll get an outlet fixed, but you’ll be left paying $4,000 for the required code upgrade. There can be deductibles and delays in the work being completed. You also don’t want to buy the cheapest warranty; that’s not always the best.