Should landlords buy a home warranty for rental property? Learn the benefits of having protection for home systems and appliances for your rentals.
As a landlord, you have an interest in investments and making money. But have you thought about capitalizing on something just as important: helping to protect your budget when it comes to those investments? A home warranty for rental property can do just that.
Whether you’re buying, selling, or renting property, a home warranty can give you peace of mind. Also known as a home service contract, the home warranty typically covers mechanical systems and built-in appliances in the home.
This is different from homeowner’s insurance, which covers damage from external forces. Home warranties are designed to fill the gap between the original manufacturer’s warranty and normal wear and tear.
Here’s how it works. If your AC goes out or your dishwasher breaks, you contact the home service company and describe the problem. The dispatcher will send the appropriate licensed plumber, electrician, or appliance repair specialist to service the call. Expect to pay a service fee of about $50 or higher for each visit.
Remember that home warranties don’t provide blanket service. They don’t cover repairs or replacement for pre-existing conditions or for elderly mechanicals that are beyond their useful lifespan. But they are good for emergencies. Sure, you’ll have to pay the annual contract fee along with service call fee(s), but that can be a drop in the bucket when it comes to paying for repairs or all-new items that might have been covered by the warranty, right? Another bonus? Since you’re a landlord, the cost of the home warranty on the rental property may be tax deductible — the annual premium and service fees may be considered operating expenses that can be claimed (of course, you must verify any tax benefits with your tax professional).
When you think about the wide range of systems and appliances that it takes to operate your home, a home service contract is a bargain at approximately $400 to $500 and could pay for itself with one use.
Whether your property is income-producing or your family home, Shoreview Property Management can help make your life easier and save you time and headaches. The variety of services we offer can allow you to have a complete hands-off approach if desired, or choose from our a la carte services. We can do as little or as much as needed, from fielding late night calls from tenants regarding maintenance issues to making sure your contractor stays on budget and on time.