As a landlord or rental property owner, you want to keep maintenance costs down to optimize your rental income. While home warranties may present some benefits in that regard, it is important to carefully consider if a home warranty is right for your needs. Our trusted Henderson and Las Vegas property managers share the pros and cons of home warranty coverage for rental properties.

Pros of Home Warranty for Investment Properties

Maintaining your rental property and keeping it in top condition can be a big challenge for landlords. This is why a home warranty can be appealing to owners who want to lower repair costs while ensuring tenants are satisfied with their service. Here is why home warranty coverage for rental properties may be a good idea for some landlords.

Potential Cost Savings on Repairs

If an appliance breaks down, there is a plumbing issue, or the HVAC system fails in a rental property, landlords run the risk of expensive repairs or replacements. However, home warranty coverage can protect owners from having to pay for these things out of pocket.

Property owners can pay a fixed annual or monthly cost to have home warranty coverage on various household items, appliances, and systems, including:

• Air conditioner
• Washer and dryer
• Dishwasher
• Refrigerator
• Stoves and ovens
• Electrical systems
• Plumbing systems

In some cases, landlords may save hundreds or even thousands of dollars in repairs and substantial expenses by choosing a comprehensive home warranty for their rental property.

Tenant Trust and Appreciation

Investing in a rental home warranty can also significantly enhance a tenant’s trust in their landlord. When renters know they are protected and there is a plan in place if anything happens, it can greatly improve tenant satisfaction. It demonstrates that the landlord is proactive in maintaining the rental property and preventing disruptions, which tenants value.

RELATED: 10 Landlord Tips to Build Strong Relationships With Tenants

Convenience of Home Warranty

For some landlords, it is more convenient to contact their home warranty company for repairs than it is to find a qualified technician or maintenance professional on their own. If you do not already have connections with a reliable service provider, it can be a long process to do research, schedule appointments, and search for the best rates.

With home warranty coverage, rental property owners can simply file a claim and know their warranty company will connect them with a prescreened vendor in their area. This may be particularly helpful for owners who do not live close to their rental properties.

Maintain Property Values

Staying on top of repairs and taking care of issues can help maintain your rental property’s value. In some cases, a minor issue that is ignored will quickly turn into a significant problem that makes your rental property less enticing to potential renters. A home warranty can make it easier and more affordable to make necessary repairs that keep your property competitive in the rental market.

Cons of Home Warranty Coverage for Rental Properties

While there are benefits to home warranties for rental properties, there are also some challenges and concerns that landlords often experience. Here is why you will want to thoroughly research home warranty coverage before committing.

Coverage Exclusions

There is nothing more frustrating than investing in a home warranty policy only to learn that the issue you have is not covered. One of the biggest landlord complaints with home warranties is that coverage is limited, and they often do not pay for the repair or replacement they need.

Before signing any home warranty contract, review what appliances, systems, and issues are covered and if there are limitations or exclusions that may sway your decision. For example, pre-existing issues or routine maintenance are typically not covered by a standard home warranty.

Service Fees

Most home warranty companies charge a service fee for every new repair request or claim you file. If you have an older rental property or expect to have frequent repairs, these service fees can add up quickly and end up costing you more than you expected. Overall, expensive service fees can potentially offset the cost savings of the warranty.

Long Claims Process

While many rental property owners find that home warranties are convenient, lengthy or complicated claims processes can be quite the opposite. Some home warranty companies are slow to respond to calls or claims, leaving landlords to deal with frustrated tenants who want their issues fixed right away.

If you are shopping around for a home warranty for your rental property, be sure to ask about the claims process and what is involved in requesting a repair. There should be an easy way to report the problem and schedule a repair as soon as possible.

Provider Limitations

Another issue many landlords face with home warranties is the limited choice of repair technicians or service providers. Because warranty companies have their own network of professionals they work with, you will not have much say over who can perform the repair.

The smaller network of technicians also means it could take a while to get your repair scheduled. If it happens to be busy and the provider has no openings, it could be days before the service professional can perform an inspection and determine how to proceed. This could lead to tenant dissatisfaction and retention problems.

RELATED: 5 Ways Landlords Can Retain Good Tenants

Working With an Experienced Property Manager to Streamline Property Maintenance

If you are thinking about a home warranty for your rental property as a way to save on maintenance costs, there are other ways to lower your expenses and streamline the process. Working with a trusted property management company means you have a professional on your side, with connections to qualified service providers at lower negotiated rates.

At Black & Cherry, our Henderson and Las Vegas property management experts are available at all hours to handle your tenant maintenance requests and repair issues. We also stay on top of routine repairs to maintain your rental property’s condition and keep property values strong. Contact our team to learn more about our property management services and how we can help you maximize your rental income potential!