If you are a landlord, when it comes to a Home Warranty, just say No!

It happens every day, a new investor, and some seasoned investors for that matter, purchase a new Houston rental property. Because the seller is willing to pay upwards of $500 without question, for a Home Warranty policy, the investor feels obligated to take the offer. There may be a better alternative.

Home Warranty companies are profitable. The list of Home Warranty providers seems to grow every year. These companies have made a science out of the life cycle of home systems, and usually deliver on their promise of peace of mind for the owner occupant.Home Warranty

But the mind of the owner occupant and a tenant are very different. The owner “owns the home” is financially responsible for everything that could go wrong, and for the most part has the patience to endure the inconvenience, while waiting for a repair to be completed. The tenant however, is paying monthly for the “right to use” the home and expects all of its systems to be fully functional. Should something break, if there is a delay in getting repairs, the tenant feels he is not getting what he paid for, and the value equation in the tenants mind, begins to change.

Home Warranty Policy claims are generally not designed for rapid response. The Owner/Houston Property Manager must notify the Home Warranty Company, who then contacts a service vendor. The Service Vendor must then contact the tenant and schedule an appointment. Once the Vendor arrives, someone needs to make arrangements to pay the service call deductible ($60 to $75). As discussed in a previous article, (“Pay now, or Pay much more later”) requiring tenants to pay the Home Warranty deductible, could lead to unintended and expensive consequences. Once the problem is diagnosed, parts may need to be ordered, and another scheduled appointment must be made for the actual repair. These steps all occur without the owner/property manager in the communication loop. In the best case, this process creates unnecessary delays in the service delivery, worst case the chain of communication breaks, and a needed repair goes without being made. Either way, the result is an unhappy tenant and/or the potential of property damage from deferred maintenance.

Maintenance requests must be responded to quickly. Choose your maintenance vendors wisely, in the eyes of the tenant, the vendor represents the owner/Houston property manager. Follow up on all maintenance requests once completed. The tenants will know they, and your property are valued, and will be more likely to treat your property in the same fashion.

What is the alternative to the seller funded Home Warranty? The next time ask for a $500 Seller to Buyer Credit. The Home Warranty Companies make money “playing the odds”. As an investor, saving money on the purchase price, responding to maintenance requests quickly, and creating happy customers (tenants) is “a sure thing”.


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