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Our Arch Nemesis- Home Warranties
8 Plays1 month ago
🎧 Welcome to Thoughts For Rent — the podcast where real estate gets real (and local)!
Hosted by Jenni McKenna, a Las Vegas born and raised seasoned broker, and Owner of McKenna Property Management, this show is your inside look at what’s really happening in the Vegas property management and real estate world. With over 20 years of experience herself - Jenni brings not just knowledge, but heart to the conversation.
Whether we’re talking market trends, property tips, community happenings, or just the everyday quirks of Vegas living, this podcast is all about keeping you in the know.
💬 Real talk. Local stories. Professional insight – provided from a company who has their boots on the ground and hearts in the community.
In this episode, we’re covering why we here at McKenna Property Management do not like Home Warranties. We share some inside stories about why Home Warranties do not benefit your investment.
McKenna Property Management, proudly managing Las Vegas homes since 2005 (and loving every minute of it).
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Website: McKennaPropertyManagement.com
Phone: 702-434-HOME (4663)
Owner/Broker: Jenni McKenna B.29819
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Transcript
Introduction to the Hosts & Topic
00:00:20
Irelynn Zurflueh
Hi everyone, welcome back to Thoughts for Rent, Realtors Keeping It Real. I am Ireland and to my right is Jenny McKenna, broker owner of McKenna Property Management.
00:00:31
Irelynn Zurflueh
And today i have a question for her. I'm ready. Jenny, do you have a home warranty? Absolutely not. You mean, do you are you saying that do I have something that I've paid hundreds of dollars for that is like toilet paper?
00:00:48
Irelynn Zurflueh
No, I do not have home warranties. So you don't have a home warranty on your personal house or any of your investments? None. Have you ever had home
The Evolution of Home Warranties
00:00:58
Irelynn Zurflueh
warranties? I did. Many, many years ago, I thought they were the greatest thing since Pi.
00:01:02
Irelynn Zurflueh
What? but change What The home warranty companies changed. That's what changed. So when home warranties, when I was in real estate in 1993, when I was selling a property, I would always ask the seller to provide my buyer with a home warranty.
00:01:18
Irelynn Zurflueh
Because it gave me peace of mind, I thought. It gave me peace of mind that I was giving, you know, selling this property to this buyer, not knowing exactly what was going on. And then the new owner would only have to pay a small deductible if there was an electrical item or an AC item.
00:01:35
Irelynn Zurflueh
And Ireland, for years, it worked great. For years, they didn't deny claims. For years, they were truly a great product. But that is not the case and that has not been the case for the last 10 years.
00:01:49
Irelynn Zurflueh
So they got so big in the industry and, you know, through word of mouth or maybe through marketing or whatever, um they do not have a good product anymore. None of them do because I've tried all of them in the the property management world and none of them really stand up to do what they say they're going to do.
00:02:07
Irelynn Zurflueh
Yeah.
Personal Experiences with Home Warranties
00:02:08
Irelynn Zurflueh
I've never, I've lived in, I've never owned a house before. Sorry, I'm little young. She will be getting some soon, though. One day. Not one day, soon.
00:02:18
Irelynn Zurflueh
I've lived in only one rental property that had a home warranty, and it was a completely different experience than the other rentals that I've rented that didn't have home warranties.
00:02:29
Irelynn Zurflueh
I remember, actually, my dishwasher didn't work. It took about two weeks to get fixed. It couldn't even be fixed. They had to replace it.
00:02:40
Irelynn Zurflueh
And it was ah hassle. I remember I had to have my sister go and meet the repair guy there because they couldn't do a time that actually worked for my schedule. And it was much different. It's a much different experience from the renter perspective.
00:02:55
Irelynn Zurflueh
And then at the same time, you're not really getting what I think owners think they're actually getting out of it. So we're going to talk a little about home warranties today.
Are Home Warranties Worth It for Investors?
00:03:04
Irelynn Zurflueh
We're goingnna talk about how You may feel a type of way about them for your personal home, but for investments, they just might be the... Wasted money. The wasted money, that rock in your shoe that's causing all the discomfort for you. oh heck yeah. So that's kind of what we're going to talk a little bit about today. Jenny's very excited for this subject. She loves talking about how much she hates Home Orange. It's true. And I actually just talked to an owner yesterday. he has seven properties with us and he called me up, left a message. He left a message for me first.
00:03:35
Irelynn Zurflueh
And I actually sent it over to Jenny and I said, i think you might want to have this conversation about if you should get a home warranty. And his message was so cute and nice. And he's like, hey, Jenny, I just saw a commercial and I was thinking that maybe just for peace of mind, i should, ah you know, get home warranties on all my investment properties.
00:03:55
Irelynn Zurflueh
And as soon as I got that email from Ireland, I picked up the phone. too quick. And I called him and I said, no, please don't do that. And here's a couple, just a couple reasons why.
00:04:07
Irelynn Zurflueh
and it was so nice. He said, Jenny, you are the professional. You are in the business. I absolutely believe you. i will not be looking into home warranties. And I thought that was really, that was a nice comment.
00:04:18
Irelynn Zurflueh
Yeah. and she's She's a much better salesperson than I am. So I said, if you want to sell this guy on not getting home warranties, I may not be the one to to make the call. So I had Jenny doing it.
Understanding Home Warranties
00:04:28
Irelynn Zurflueh
Well, and the thing is, is I liked, you know, when he said, i want peace of mind because I really do think that's how home warranty sell it to investors.
00:04:37
Irelynn Zurflueh
Hey, you have this 500 plus investment property and you're not living in it. Somebody else is there. And I just don't, you know, as an owner, I just don't want the problems. I want peace of mind.
00:04:49
Irelynn Zurflueh
So for anyone who kind of needs the quick definition ah of a home warranty, it's a third-party company that you either pay a monthly cost to or you pay a yearly cost to. And then anytime you have an issue with the house, you call that third party, open up a home warranty claim, and then they assign a vendor to come out and do the fix.
00:05:07
Irelynn Zurflueh
And so different companies will have different claim charges. So anytime you open up a claim, they're pretty much charging you like a flat rate. And then the repair is supposed to be Included within that home warranty and included within that flat rate.
Problems with Terms and Conditions
00:05:22
Irelynn Zurflueh
So that's the appeal of it. Pay a monthly fee or a yearly fee that you know for sure. Have the set claim charge, whether it's $75 $100 whatever with what company.
00:05:34
Irelynn Zurflueh
And then no matter what the repair is, it's supposed to be covered under that subscription and claim charge. Supposed to be. That's the big thing. So what home warranties do now is they sell you on, oh yeah, pay the deductible and we'll repair it or replace it like for like. And what they've been able to do now is put all these little small prints ah in their home warranty. It's almost like when you're watching TV and there's like an ad for a drug. And then at the very end, it's like, this drug could cause you this, this, this, this this is this and you could die. Well, that's what I feel like home warranties are doing in their home warranty policy. They have all of these clauses.
00:06:13
Irelynn Zurflueh
And so you're not getting peace of mind. You're going to put in a claim. That claim is going to take you anywhere from 45 minutes to an hour if you have to talk to someone. So just be ready to be on hold.
00:06:26
Irelynn Zurflueh
If they say, oh it's so convenient. because we can do it online. If you do it online, you're not going to get the vendor's name and number. So therefore you're not going to be able to solve the problem that the resident wants, which is who's coming out to my house and you know when are they?
00:06:42
Irelynn Zurflueh
so nine out of 10 times you have to be on the phone. So that's 45 minutes to an hour. It's ridiculous that you have to wait that long. You finally get the claim. You finally get that person over that quote unquote. A completely random vendor that would know nothing about that the home warranties decided to
Vendor Issues with Home Warranties
00:07:01
Irelynn Zurflueh
assign.
00:07:01
Irelynn Zurflueh
That the home warranty company knows nothing about, I guarantee you, because I've seen some of these people and they walk in and I'll give you a perfect example. They come over to a two story property for an AC fix where the AC is on the roof and they don't have a ladder.
00:07:18
Irelynn Zurflueh
I've even seen people just have to go deal with a smoke alarm and they don't have a ladder. and It's a first story property. right This is what I say. I don't think this is true, but this is really what is in my brain. I feel like you submit a request, ah a claim, and they go down to where all those guys are standing outside of Home Depot and they pull them in and they're like, hey guys, I have an AC repair over here and I've got a smoke detector over here and oh, we've got an electrical problem over here.
00:07:45
Irelynn Zurflueh
So you guys go to this one and this one and this one. That's how I feel like the vendor is. Yeah. very unprofessional, not knowledgeable whatsoever. And then this is what is scary.
Impact on Property Management
00:07:55
Irelynn Zurflueh
The fix that you're going to get, you're not going to get a good fix. You're probably going to get a fix that is going to cause more problems in the future.
00:08:02
Irelynn Zurflueh
So to me, that peace of mind, no way that that flew out the window the first time we had any issues with home warranty. Yeah. We like to call them bandaid fixes. They just put a bandaid over what the actual issue is.
00:08:15
Irelynn Zurflueh
and they're, at least from our experience, they're really bad about sending reports. They're really bad about sending photos. So even when we're trying to figure out what the problem is, we're not getting any information from these vendors. So that's just the home warranty. They're offering you peace of mind, but there's definitely some parts of it that are a little shysty when it comes to the vendors and the assigning and the creating of the claims.
00:08:41
Irelynn Zurflueh
And then you have the issue of, Home warranties do not care about any NRS rule, any kind of regional or national rule regarding property management.
00:08:52
Irelynn Zurflueh
So we've talked on this podcast before. There's habitability laws. There's requirement to do certain repairs. There are laws to protect residents in those situations. The home warranty does not care about those laws at all.
00:09:06
Irelynn Zurflueh
So if you get a resident who calls in on a Monday morning and says, hey, my AC just went out. And even if you have that claim open at 9 o'clock, an hour later, with the home warranty, there's no guarantee that they will go out within the 48 hours. There's no guarantee that they'll fix it within the 48 hours.
00:09:25
Irelynn Zurflueh
We've had home warranties straight up tell us that there was a seven-day wait for ACs at one point. And then we had to call the owner and say, you're either going to get to do this in your home warranty and we have no idea what they're going charge you or what's actually going to be covered,
00:09:40
Irelynn Zurflueh
And then you have to pay for the rehousing or you have to pay for some kind of rebate because of this habitability law, or we can send someone out within the 48 hours and get this taken care of. It's especially in the summer, especially in Vegas. I'm sure people have home warranties in like colder places where they have to worry about the heat probably deal about the same thing.
00:10:00
Irelynn Zurflueh
where they don't care at all yeah about timelines. Well, and then let's not forget, hot water is also something that is required here in Nevada. So a water heater, usually when a water heater goes out, it goes out.
00:10:11
Irelynn Zurflueh
There's no fixing a water heater. Usually it's just end of life. Well, you call that into a home warranty, And it's going to take them, oh, I don't know, three to five days to send somebody out.
00:10:22
Irelynn Zurflueh
And then if they do send somebody out, this is classic. They'll send somebody out. They'll realize they need a new water heater. We're following up trying to say, hey, I know you went out. what's what's the When are we going to get this new water heater?
00:10:34
Irelynn Zurflueh
And they say, we got to get it approved. We have to get it approved. What you mean you have to get it approved? So that takes another two days. And in the interim, that resident who is paying that monthly rent,
00:10:47
Irelynn Zurflueh
They are not happy and they do not understand because they're like, listen, I told you on Monday I had no hot water. Now I'm going into the weekend and I still have no hot water and you're not telling me when I'm going to get hot water.
00:11:03
Irelynn Zurflueh
It's just, it's not peace of mind. It's, it's the pebble in the, I like to say it's the rock in your shoe because it gets a lot bigger than just a pal on pebble on some of those things. There is also no basic home
What Home Warranties Don't Cover
00:11:18
Irelynn Zurflueh
warranty plan. Maybe you can get a very complex, very pricey plan from a home warranty provider.
00:11:24
Irelynn Zurflueh
There is no basic starter plan that covers cosmetic work or mold. So your water heater leaks and then that base on your water heater, the drywall starts to get wet, needs to be replaced.
00:11:38
Irelynn Zurflueh
Your home warranty is not doing that. Correct. You have a leaky sink and it caused some warping to the drawer, or even cause mold potentially to grow because it was leaking.
00:11:50
Irelynn Zurflueh
Home warranty will not cover that. And they also won't even, some home warranties won't even cover the opening of the drywall. So some, we will literally send out a home warranty company, a plumber to check something out.
00:12:02
Irelynn Zurflueh
They'll have an appointment with the resident. They will then call us and say, Hey, we can't open the drywall and it's somewhere in the drywall. you need to send somebody out to open the drywall. And then we have to send somebody out to open the drywall on a second appointment.
00:12:16
Irelynn Zurflueh
And then the plumber will come back on a third appointment to look at what's actually happening. Maybe they'll fix it at the third appointment. Maybe they won't. then they have to come and fix it on the fourth appointment after approval has been given.
00:12:29
Irelynn Zurflueh
And then they'll leave and we have to send somebody out to repatch the drywall. So you're looking at four appointments minimum, if not more for the Even looking inside a wall just to see and every time that vendor comes, that resident has to be there because the resident's not going to necessarily say, oh, open up the door to any vendor that's there.
00:12:51
Irelynn Zurflueh
so Well, home warranties won't even let people not be present. That's true. Some residents can agree to let people into the property without them being there if it's written and you know so on and so forth.
00:13:02
Irelynn Zurflueh
But home warranties won't even go in. So even if the resident's saying, I gave you permission to enter the house, They won't. So what I told many, many, what I have told many, many owners is if you want to keep keep a a good resident, and you want to keep them as long as you can, because that's how you really make your money on an investment property and property management.
00:13:21
Irelynn Zurflueh
You don't have any vacancies, right? That's the number
Alternatives to Home Warranties
00:13:24
Irelynn Zurflueh
one thing. Don't have a vacancy. don't do a home warranty because if you do a home warranty and you have something that you actually need them to fix, you are going to ruin the relationship of a good resident because there is no resident that is going to do a four to five vendor call on something. They just don't get it, nor should they, or nor should they have to do that is my opinion. Yeah. That's just rude.
00:13:50
Irelynn Zurflueh
So that's one of the things. So if we're not going to do home warranties, which I think we've talked for 13 minutes on why not to, What's the other alternative then? Well, I think obviously the first and foremost alternative is have a company, have a trust and a good relationship with your property manager to know that their vendors are good.
00:14:09
Irelynn Zurflueh
I know of a couple of property management companies that won't even take on home warranties because they're not willing to jeopardize their relationship with either party, the resident or the owner when dealing with a home warranty like that.
00:14:22
Irelynn Zurflueh
And I'm going to be very transparent yeah on this. If what I know now, I knew when we started the property management company in 2005, I would have made that rule.
00:14:33
Irelynn Zurflueh
I would have said no, but because I was starting a company, I kind of brought in everybody that wanted property management so that we could get going. And then it's really hard now when you have when you have some properties that have home warranties. to be able to tell anybody who's coming in no.
00:14:52
Irelynn Zurflueh
But I will tell you that there is an admin, there will be an admin charge moving forward next year because of the amount of time on the few properties that we still have where owners require home warranties because of the amount of time, energy, frustration it is for us to handle it.
00:15:11
Irelynn Zurflueh
We just can't do it under the realm of the normal management fee. So, If I knew then what I know now, I promise you, Ireland, I would say no to home warranties.
00:15:23
Irelynn Zurflueh
Yeah. Just one take on a property that had a home warranty. Yeah. And we're seeing a lot of owners make that decision not to have a home warranty anymore because of the advice and because of the stories that we've shared with them.
00:15:34
Irelynn Zurflueh
And I feel like it's been a very, very small few who have even vocalized any kind of regret. Most of the time, everyone seems pretty satisfied because they know But if they're not going with their home warranty, they at least have that trust and that solid relationship with us that we have good vendors. so And the warranties that are going to come from our vendors on those big ticket items. So if you're talking about a water heater, an AC, yeah, it sucks to pay those kind of costs when you're replacing an AC or water heater.
00:16:04
Irelynn Zurflueh
But at least you're going to get a warranty that's going to stand up and do what what it's supposed to do. a direct vendor warranty rather than a warranty through third-party company that you pay monthly.
00:16:17
Irelynn Zurflueh
So that's what we always strive to get is really solid vendor warranties um for new installations and new appliances that get put in. And then if you are self-managing or if you you know want to have that peace of mind and comfort outside of just having trustworthy vendors,
00:16:37
Irelynn Zurflueh
The other option is to just create a little cushion. I call it the repair fund. And I do it on my own investment properties. So every month you get rent that comes in, just take a little portion of it and put it over onto this other bank account.
00:16:51
Irelynn Zurflueh
Call it the repair fund. And if you're thinking about it, a a home warranty is going to charge you anywhere from $800 to $1,000 for the year anyways. That is your cost if you get that one-year home warranty.
00:17:03
Irelynn Zurflueh
So just fund it right away as if you were funding a home warranty. And then every month, put just a little bit in. And then that way, when there is big-ticket item... Yeah, you may not have all of it that you need in that repair fund, but you'll have the majority of it and it won't feel as overwhelming. So that, in my opinion, that is your safest way to do it.
00:17:25
Irelynn Zurflueh
Just create a little repair fund. Literally the exact same amount that you'd be paying monthly to your home warranty. You can put it into a separate fund. I think that's really great. And I think, I know that we've already talked about all of the negatives about home warranty, but even in moments where a resident may report two separate items like their kitchen sink is leaking and then they have a ah faulty electrical item.
00:17:48
Irelynn Zurflueh
Most of the time you could send out a handyman to address both items at once.
Complexity of Claim Processes
00:17:54
Irelynn Zurflueh
Your home warranty will require that you open up two separate claims and pay two separate claim fees because they're two different categories of repair.
00:18:04
Irelynn Zurflueh
And so even in that regards, Just thinking about, oh, if if somebody moves in and they report you know two things that they notice, that'd be $150 right there just to open the claim where a handyman could potentially go out and do it for relatively the same price depending on what the issue is.
00:18:23
Irelynn Zurflueh
Open that claim and then guess what? Two separate vendors are going out there, so two separate appointments. I mean, it's just a for everyone. If they're making it harder than they need to be, they're doing everything in their power to make it harder to actually get jobs covered. They're making it harder for the resident to schedule appointments. They're making it harder for the vendors. And why do you why do you think they're doing that, Ireland? Because I have my opinion.
00:18:45
Irelynn Zurflueh
Why think they're making it harder? I think they're doing that because it means less people will open up less. Amen. That's exactly right. They're going to get you on the front end. They're going to make you feel all warm and fuzzy. Oh, look at this little security blanket that you're going to put on called home warranty. And then when you really need it, they're going to leave you out in the cold and they're going to rip it right off of you.
00:19:05
Irelynn Zurflueh
And that's what we've seen time and time and time again. I've had so many owners throw their hands up in the air and go, Jenny, I can't deal with it. There's two, just go send your vendor.
00:19:16
Irelynn Zurflueh
Just go send your vendor and I'll eat whatever the cost was that I had this year and I won't renew my home warranty. And that has happened so many times. Yeah. So in case you didn't pick up on it, we don't like home
Final Advice on Home Warranties
00:19:33
Irelynn Zurflueh
warranties. We don't suggest them.
00:19:35
Irelynn Zurflueh
We do not support them. We are not allies with the home warranty. bet you we're going to get some haters out there that are like home warranty representatives that are like, that McKenna Property Management, Ireland and Jenny were bad-mouthing me. You know what?
00:19:48
Irelynn Zurflueh
Everything we said, we can factually back up over the 20 years. I have story after story and fact after fact and time frame after time frame. Everything I'm saying is absolutely true and is not even exaggerated. Yeah. Yeah.
00:20:05
Irelynn Zurflueh
So if you were thinking about getting a home warranty or if your renewal is coming up on your home warranty, just think twice. Sleep on it. Reach out to us.
00:20:17
Irelynn Zurflueh
We'll tell you what to do. But we really just don't think home warranties a good idea, especially for your investments. Keep that relationship with your renter strong. Make sure you're using trustworthy vendors who will actually fix the job and not just put a Band-Aid fix on it.
00:20:32
Irelynn Zurflueh
And so that's what we we preach over here.
Listener Engagement & Conclusion
00:20:35
Irelynn Zurflueh
And we just wanted, we'll get off our soapbox Our soapbox on this one. But we wanted to just share our passion with you about home warranty. And share our knowledge and and experiences of what we've had to go through so that maybe we can stop you from having that rock in your shoe because that's really what it'll end up being miserable for you.
00:20:57
Irelynn Zurflueh
Well, if you have any really funny stories about your home warranty, Feel free to comment and leave us a little message. If you have any questions about home warranties or questions about investments, feel free to reach out to us. We're always happy to help, especially if you're in the Nevada region. and you know what I want?
00:21:12
Irelynn Zurflueh
If you know somebody that's about to buy a home warranty, share this episode with them. Especially if it's for their investment. Yes. But yeah, just... but yeah just Stay away from home warranties. They're like a toxic ex.
00:21:26
Irelynn Zurflueh
Better if you don't communicate with them at all. And then we'll guys. And make sure, yeah if you like this episode and you found value to it, make sure you subscribe. We always want to make sure that you we drop once a week, that you're getting all this information, thoughts for rent, Realtors Keeping It Real.
00:21:41
Irelynn Zurflueh
We bring up lots of different topics, and hopefully there's something there that's interesting for you. Bye, guys. See you later.