If you’re planning to rent out your property, you may be wondering whether you should invest in home warranties to cover the cost of damages that may occur while the tenants are occupying the place. Here are some considerations to help you decide whether you should buy a home warranty or not, for your rental property in Philadelphia.
What is a Home Warranty?
A Home Warranty is a residential service contract planned to cover the maintenance costs of the household systems which tend to break or wear out. It can also cover the costs of necessary repairs or replacements in your rental home. The assets covered in the warranty and the charges differ from plan to plan. Commonly, it covers the appliances that are used the most, like refrigerators, water heaters, washing machines, stoves, or plumbing and electrical repairs.
Know that a home warranty is different from homeowner’s insurance. Homeowner’s insurance covers the property losses caused by vandalism, fire, theft, and other known dangers. In contrast, the home warranty covers repairs, services, and replacements of the appliances and HVAC systems of the house.
Pros of Getting a Home Warranty
Home warranties offer security for the landlord, when it comes to maintaining and replacing appliances. It is a smart way of keeping the house well-maintained and the systems in peak functioning order. Some other key benefits include,
- Peace of Mind
When you know that professionals will look after the major maintenance and repair costs, you can relax. The home warranty covers all the costs related to the items listed in the policy. Once you choose the package, you don’t have to worry about setting aside extra money or making other arrangements for the repairs. For example, every time there is an issue in the HVAC system, or if the refrigerator compressor breaks down, you won’t have to look for a technician or plumber.
- Home Warranties are Transferable
One of the best features of buying a home warranty is that it can be transferred from seller to buyer. Hence, if you are thinking of selling your Philadelphia home in the upcoming year, getting a home warranty can be a good idea. It will cover the costs of repairs while you own the home and increase your property’s value during the sale.
- Tax-Deductibility
Buying a home warranty plan for your Philadelphia rental unit also has tax benefits as home warranty premiums are tax-deductible. Since your rental home is a source of your income, your premium payments will be considered as a deductible cost.
Cons of Getting a Home Warranty
While having a home warranty has some advantages, getting one may not be the right decision for you. Here are a few reasons why.
Coverage Concerns
One of the major drawbacks of a home warranty is that it does not cover all the costs. It covers some significant rental property damages, and there is a limit to how much you can spend on the repairs and replacements from the insurance. For example, certain damages like rust, mold, pre-existing broken appliances, housebreaking, or new modifications for new equipment are not typically covered under a home warranty. You will have to read the warranty terms thoroughly to know how much you can spend on respective repairs.
Home Warranties Do Not Cover Emergency Repairs
A home warranty does not cover costs related to items that have not been maintained well. Also, some plans do not pay for certain damages and heavy expenses related to the emergency complaint resolution. In such instances, you may have to pay for the damages.
There are several benefits of buying a home warranty. If you choose the right one, you can save up a lot and improve your return on investment (ROI.) Consider taking advice from a trusted Philadelphia property management company, like TCS Management, when choosing a home warranty.
TCS Management is a full-service property management company headquartered in Philadelphia, Pennsylvania, also serving Cherry Hill, NJ, Wilmington, Delaware, and the surrounding areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.
Our professionals know what home warranties can protect your house and benefit your investment and can recommend the best one according to your real estate needs. For more information, contact us at TCS Management.
