Estey Real Estate Sales and Property Management
September 2014
Eric Hogland - Estey Real Estate & Property Management
Eric Hoglund GRI, RMP, SRES
Providing our expertise
to meet YOUR needs!
Street Address
935 First Street
Benicia, CA 94510
Phone: 707.745.0924
Best Practices
Check Your Insurance Events can happen - flood, extreme heat, earthquakes, fire, and more! It is important to check your insurance to obtain the best coverage possible and ensure that it is current.Review now with your insurance agent before a disaster/emergency occurs.
If An Emergency Occurs: Please be patient and avoid tying up critical phone lines and our time. Our first priority during any emergency is to handle the situation, taking any necessary measures for the safety of your property and your tenants. Then, we will contact you as soon as we are able.
Our Associations
Working with a Home Warranty Company
Many investment owners place Home Warranty Policies on their rental units to help with repair and replacement costs. These companies are good for owners but they do add a layer of complication to any repair. Normally with tenant work requests, we call our trusted vendor, the appointment is made with the tenant, we are called when the problem is solved or to report any further action is needed. If the repair is above our contact limits, or it is not worth repairing, the owner is called and action is taken to repair or replace. The tenant is happy, the owner is happy, we are happy and life goes on.
Working with a Home Warranty Company is different; it sounds easy but in reality it's a little more complicated. Often a repair will take a week or more. If the repair does not solve the issue, it is another week for the return of the vendor. If that vendor cannot do the repair, the Warranty company sends another and we start the process again. If that repair does not hold, we can ask to send our vendor but it must be approved to still meet the guidelines of the Home Warranty Company and have the cost of the repair/replacement covered. It can take 3-4 weeks and whatever is broken, the tenant will be without for that period of time, and as you can imagine, their frustration mounts. Sometimes, if what is broken cannot be repaired, the warranty company will offer to replace with like kind, or offer a pay-off. Most companies will offer to sell you an upgrade at a wholesale price. Its good to ask what wholesale opportunities are available should this situation occur.
This whole delayed process breeds frustration for the tenants, for the owner, for the property manager...all are seeking closure and not more red tape. It is no one's fault that the unit went out, or that it takes so long to get completed, it is just how it works with warranty companies. The older your plumbing, electrical or appliances, the higher the likelihood of them failing. Often the tenant will ask for a monetary compensation for the inconvenience. This is a business decision that owners should take seriously as "a little goes along way" in retaining a tenant and ultimately saving turn around costs with a disgruntled tenant. An angry tenant can be more costly than a few dollars. We suggest a compromise. If the tenant takes the Owner to small claims court, the owner must be present. Your time and our time is costly. Sometimes the owner will complain that it takes us too long to get something done with a warranty company but believe me, if we could make it happen faster we would. This costs us a tremendous amount of time, and puts our tenant PR skills to the test as well.
Appliances that have outlived there useful life should be replaced. We have a list of how long household items should last from HUD. If you get 18 years out of a stove, oven, water heater etc., you are lucky.
The negative issues with warranty companies are:
  • Minimum of 24-48 hours for contractor
  • Vendors might not be the best
  • Takes longer to get new appliance when replaced
  • 2-3 month delays for reimbursement costs
  • Lack of communication
  • Poor quality installation and workmanship
  • Often owners do not know what is covered versus not covered
Many property managers will not work with these companies as it is more complicated, takes more time in getting the repair/replacement completed and frustrating to the tenants. Estey has worked with most, if not all, warranty companies. It saves our owners money but we have to do extra PR to try to keep the tenant happy during this time and it takes more time for office staff to handle. The tenants are your customer and are charged with care and maintenance of your investment so working with them is an excellent idea.
Important Questions to
Ask Your Insurance Agent
There are important steps that investors must take to ensure the success of their rental property; one of the most critical is that of procuring the right property insurance.
As your property management company, we cannot advise you specifically on what insurance policy to purchase. The purpose of this article is simply to make you aware of common insurance facts and questions that are important to ask your insurance provider. Failing to know what coverage you have could lead to major financial loss in the future.
Does my property have the right insurance for an investment/rental property? This is THE key question to ask. Many people do not realize that a normal homeowner's insurance policy is generally invalid within 30 days after vacating the property and converting it to a rental property. A different policy should be put in place as soon as possible.
In addition, the best insurance for a rental policy will give you additional coverages, such as loss of rent. The type of insurance coverage for landlords generally falls under the umbrella term "property and casualty insurance."
What type or types of insurance do I currently have on my rental property? Building coverage, hazard and fire Insurance, as well as liability insurance, are always needed for the physical property. However, there are additional insurances that can be carried, depending on the location of the property, age of the property, and other extenuating factors. Other insurances to investigate are flood insurance if you are in a flood plain, sewer backup insurance, workman's compensation, terrorism insurance, and loss of income insurance. Question your agent on your current insurance and what other policies are available that would be appropriate for your investment and worth the cost.
A big key to obtaining the right insurance is to provide your agent with ALL the facts - age of the property, condition, area problems, special use, etc. It is very important to be specific on what "type" of investment property you have (for example, horse property, condominium, single-family, apartment etc.). Most landlord insurances are for 1-4 units and multiple units above this number are handled on a different basis.
I have outbuildings on my rental property, are they covered? Most policies generally do not include additional structures, unless specified. This is another reason why you need to disclose all the information to your insurance agent and obtain quotes.
Is my property covered for loss of rent? Covering rental loss, under the right circumstance (such as a building fire), is one of the pressing reasons for obtaining a good landlord/rental policy. There is no coverage for tenants giving a standard notice to quit and vacating the premises. However, it may cover vandalism during an eviction or vacancy - but you need to ask. Have your agent discuss in detail the paragraphs in your insurance paperwork which pertain to vacancies / income loss and what is your actual coverage.
Is my property covered for disasters such as fire, tornado, hurricane, tsunami, flood, and more? Normally, most natural disasters are not covered. However, the insurance company may make a determination that many damages are covered. For example, although a flood isn't covered, there may be coverage for "water damage." Another example, a house fire is usually covered for damage as long as the landlord has not shown neglect which caused the fire. The insurance company will have a list of criteria for what is and what is not covered for extreme conditions under the existing policy. Again, find out the facts, ask questions.
How can I reduce the cost of my landlord policy? Landlord insurance is more expensive than a homeowner policy and the main reason for the increased cost is that a landlord doesn't have any control over a tenant's actions, implying additional elements of risk. In spite of the higher cost, landlord insurance can be made more affordable through discounts for having security alarms, especially monitored ones, burglar alarms, deadbolt locks, and fire extinguishers. Ask your agent for recommendations on cost-saving items you can do. Remember, landlord insurance IS worth the cost.
It is of utmost importance and your responsibility to consult your insurance provider regarding your coverage. It is also part of your contract with us that you provide our company with proof of insurance.
There are many insurance companies and plans available and it pays to compare coverage. If your agent cannot spare you the time to answer your questions, seriously think about shopping for another agent and/or company. Review your policies at least once a year, require that your agent provide you with the facts, and take out the best possible policy for your specific investment property to protect your investment.

The material provided in this newsletter is for informational and educational purposes only. It is NOT legal advice.
Although we believe this material is accurate, we cannot guarantee that it is 100% without errors.

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