As a landlord, cash flow is the backbone of your business. If you have a bad quality tenant not paying his rent, you have the legal option of eviction to throw out of your rental property. But you know in your heart of hearts that it is a long and costly exercise. You also know that your tenant might take revenge on you and even damage your property. One way of dealing with a problem tenant is to offer some money and get the keys. Sounds interesting, isn’t it?
Cash for keys
Cash for keys is a technique that is used by landlords to get rid of problem tenants without taking recourse to the legal process called eviction. It is a good option for landlords as they can avoid the costly and tiring process of eviction. It is also a very attractive proposition for the tenant as gets money instead of being asked to pay the rent he has not paid deliberately. It also softens them up and they are not likely to think of damaging your investment property in revenge. Cash for keys is actually a reward for the problem tenant which appears illogical but delivers desired results for the landlord. The tenant feels happy to receive money and he moves out of the property without any more delay.
Why it is a better option
From the landlord’s perspective, paying a small amount of money to a trouble making tenant is a much better option than filing for eviction and paying attorney fee. Also, eviction can take nearly a month which means the landlord loses his rent for this duration also. If the problem tenant is enticed by cash for keys offer and moves out quickly, the landlord can utilize the time to make his property rent ready for the next tenant.
Eviction can be a costly proposition
If you do not know, the average cost of eviction process in the country is nearly $3500. It may be a little bit more or less than this depending upon the state you are in. Add to this amount the money you lose in the form of rental income and it becomes clear that using cash for keys to get rid of a problem tenant is a much better option for you. If you use eviction and it drags on for a few months, it is you who end up as a loser rather than your tenant.
Another reason why paying money to your tenant instead of using eviction is better is because it nullifies any chances of damage to your property. It has been seen that many tenants vandalize the property of their landlords to take revenge on if he tries to evict them legally. If he damages your property, you can do nothing but to get it repaired to make the home attractive for the next tenant.
Do your math before paying cash
You should do your math to decide how much money you can offer your tenant as cash for keys to make move out of your property. Generally, $500 is the minimum amount of money paid as cash for key while the maximum amount paid by landlords is $5000. If you think you are going to lose more by using eviction than you are paying to your tenant, it is worthwhile to pay money to get the keys back from the problem tenant.
Pay money to your tenant only after getting it in writing that he will move out immediately after taking the money from you. Take help form an attorney to draw up this agreement so that it is legally enforceable in a court of law in future.