Is Short-Term A Viable Consideration?
As we approach the holidays and the end of the year, tenant turnover typically slows down. After all, who wants to move in freezing rain or even snow? Last year we experienced an upsurge in rentals in October after a slow September. However, by the time November first comes around, most people have hunkered down for the winter and don’t plan to move for the next 3 months. With a reduced tenant pool rental prices can be adversely affected. One solution is to offer a short-term lease period. We would advise the earliest the lease should expire would be the end of February. Spring fever for moving and nesting starts in March, and we usually see the height of the tenant pool, (and peak prices), occurring in May, June and July. Keep in mind, that with every tenant turn, you could experience a vacancy for a few weeks, making the lease expiration gradually later in the year, year after year.
There are definitely pros and cons to a short-term winter rental. I’ve noted below a list of these for your consideration:
Monthly Income Vs. no income
Less chance of frozen pipes or other winter damage
Tenant pays utilities – no utility cost to owner
No minimum management fee for empty property
Positions lease renewal in Spring for better rent & activity
Cuts down maintenance costs: Snow removal & general upkeep
Additional lease-up charge in Spring
Wear and tear from multiple moves
Additional re-key expense
Down-time during turn over
Additional rent ready expense
Even if you do decide that short-term is an attractive option, finding short-term tenants is not always easy. The renting public is trained to expect a required 12-month lease term. They often don’t even consider short-term as an option.
If you have a vacancy coming up in the next month or two and you would like us to market a three to four month lease term option, give us a call and let us know.
What You Don’t Know About Home Warranties
Are you in the market for a new investment property? Perhaps looking at an older property but concerned about the expense of a water heater failing, or worse yet, the heating system packing up with the first cold spell? A home warranty might be just the answer for you. Many people don’t realize that home warranties can be purchased for rental properties. And because you are a client of Realty Management Associates, you can purchase a home warranty at any time with Landmark, not only at the time of purchase. Typically a home warranty will cost between $350 and $500 per year depending upon the package you choose.
Home Warranties vs Home Insurance
Home insurance covers the structure of a home, as well as damages that occur because of fires, floods and other natural disasters. If your dishwasher started leaking, home insurance would likely cover the water damage it caused. A home warranty, on the other hand, would repair or replace the leaking dishwasher to stop the leak but wouldn’t cover the damage caused. Home insurance covers the structural part of a home, while a home warranty covers the systems and appliances within it. This is important to remember because there’s not much overlap between the two – homeowners want both!
What’s Covered in a Home Warranty?
A home warranty covers systems and appliances in a home that have failed from normal wear and tear. Systems and appliances have lifespans – they break down, wear out, and stop working, unfortunately. They won’t last forever, and a home warranty is there to help soften the cost of paying for a brand new system or appliance when it fails from old age (normal wear and tear).
Covered Systems in a Home Warranty
Obviously there’s the foundation, roof and walls that make up the structure of a home, but certain systems make the home comfortable and easy to live in. A home warranty contract usually covers the:
- Plumbing system
- Electrical system
- Heating system
- Cooling system
This includes things like the HVAC unit, ductwork, pipe leaks, circuit boxes and more.
Covered Appliances in a Home Warranty
The appliances that are included in different home warranty plans vary greatly. Most home warranty plans cover:
- Built-in microwave
- Range or cooktop
- Kitchen exhaust fan
- Garbage disposal
- Garage door openers
Depending on the level of coverage, plans may also include:
- Washer and dryer sets
- Ice makers
- Water softeners
Home warranties can add additional systems and coverage, depending on the homeowners needs, including:
- Swimming pools, spas and hot tubs
- Septic systems
- Grinder pumps
- Roof leak repair
Depending on the home warranty, different parts of these systems will be covered, while others may be excluded from coverage. The best way to know what’s covered in a particular home warranty plan is to read the contract thoroughly. A good rule of thumb to remember, though, is that a home warranty generally covers the mechanical parts of a system or appliance. That means the handles that you use to open your oven aren’t covered, because they don’t effect how the oven cooks your food. Now, if a heating element goes out in an oven (because it’s worn out from normal wear and tear) that would be included in a home warranty as it’s a mechanical part.
Home Warranty Limits
Some home warranty contracts have “limits” included on them. This may be set as an overall dollar amount, or on certain items within the contract. Some home warranties will cover anything on their contract up to a certain amount of money (say $24,000) and then will no longer pay for repairs and replacements, regardless of if it would be covered with the contract.
Other home warranties have limits on certain items where they will pay up to a certain amount for a repair or replacement, and then the rest must be covered by a homeowner. For example, Landmark will pay up to $1,500 on a hot water furnace, which means if the homeowner has a hot water furnace that failed from normal wear and tear, Landmark will pay $1,500 to repair or replace it, and the rest of the cost must be covered by the homeowner.
It’s important to look at limits while looking at a home warranty contract. Some home warranties are cheaper, but have low limits on many items they cover. This won’t give you as much coverage.
Home Warranty Exclusions
Every home warranty company has different types of exclusions on their contract. Sometimes these exclusions just mean it would be less than the service call fee for a homeowner to get the item repaired or replace. (A good example of this is a sink pop- up mechanism.) Other times it means it would be too costly for the home warranty company to pay for every single part of a system or appliance. There’s a reason that most home warranty premiums are so low – a home warranty can’t cover every single repair.
Another exclusion that some don’t know is that…
Home Warranties don’t cover lack of maintenance
If you don’t maintain the systems and appliances in a home, causing them to work harder and burn out faster, you probably won’t get them covered by a home warranty. Part of home warranty contracts is making sure that a homeowner makes a reasonable attempt to keep things running correctly and cleanly while they own the home.
Another exclusion is …
Home Warranties Don’t Cover “Known Conditions”
If a home inspector went through the home before closing and mentioned a number of things that needed to be repaired or replaced, a home warranty won’t cover those items. They are considered known conditions. Much like if you crash a car, and then buy insurance and attempt to file a claim, a home warranty won’t cover a system or appliance that is already in bad condition. It’s not how insurance works! Make sure to get a discount on the home so you can foot the bill on the repairs or replacements yourself, or have the seller pay for them before purchasing the home.
Make sure to get the most out of your home warranty by reading the contract and knowing what to expect! It’s important to be sure of what you’re buying when getting a home warranty, and knowing what will be covered and what won’t with a home warranty contract.
For more information on Landmark’s plans and pricing go here. Want to learn more about us? Take a look at why we were recently awarded the best home warranty company in the region.
October is a busy month for our landscape and sprinkler crew. Winterization for your sprinkler systems will be performed throughout October, as will a fall feed and weed prevention for your lawns.
Sometimes we like to brag about our tenants and sometimes our tenants like to brag about us. We recently received Google reviews from a couple of our tenants:
- Truly the best property managers we ever had! They were so attentive and quick to respond to any issues and I loved that we could pay rent online. We were even able to purchase the home from the previous owners and they connected us with an amazing realtor. Thanks for a wonderful rental experience! Laura Feo-Fernandez
- I have to say this rental experience has been the best I have ever had. The staff is incredibly friendly and the prompt attention if an issue arises with the house has been fantastic! Additionally, we love the ability to pay online!
I own a home in AZ….I wish RMA was there to manage it! Kelli Hughes
It feels wonderful to get complements from our tenants. At RMA we really work hard at developing good relations with our tenants. Happy tenants make good tenants. And good tenants make happy landlords.
What Are You Interested In?
This newsletter is intended as a resource and communication platform for you. If there is a topic, relevant to the management of your investment property, that you would like me to write on, please let me know!