Cash for Keys is a controversial process debated often in landlord circles, but something we LOVE and use. Cash for Keys is the strategy of giving your tenants money to leave the property, avoiding the eviction process altogether. We have used this technique several times over the past few years and found great success. However, before throwing money at your tenant, let’s talk about the specifics.
The theory behind Cash for Keys is simple: Giving the tenant money to leave is cheaper than paying an attorney for an eviction. Think about it: Evicting a tenant will likely take a month or longer, depending on your state. It could cost you several thousand dollars in legal fees to do so, on top of the lost rent for at least a month, maybe two, three or more. Then, you have to deal with the clean-up of a tenant who was just evicted, which is never very pretty. All in all, a normal eviction could cost you around $5,000 or more. But what if you could just offer your tenant $500 to leave the property in good condition? Exactly. That’s Cash for Keys.
7 Principles to Follow When Using Cash for Keys
Of course, $500 is just an example. Maybe you want to give more. Maybe less. It will depend on the unit, the tenant, and the motivation. However, $500 is usually enough to encourage someone to leave, especially someone desperate enough to be facing an eviction. If you are going to try Cash for Keys, the following seven principles should be followed:
Is Cash for Keys for You?
Yes, Cash for Keys stings your pride. It feels so “un-American,” like the bad guy is getting away with the crime. Some landlords flat-out refuse to even consider this idea because it feels so wrong, but remember, Cash for Keys isn’t personal; it’s business! Brad Pitt sums it up well in a phone call to Andy Garcia in one of our favorite movies Ocean’s 11, when he is stealing a large sum of cash from Andy Garcia’s casino:
“Are you watching your monitors? Okay, keep watching. In this town, your luck can change just that quickly. Take a closer look at your monitor. As your manager’s probably reporting to you now, you have a little over $160 million in your vault tonight. You may notice we’re only packing up about half that. The other half we’re leaving in your vault, booby-trapped, as a hostage. You let our $80 million go, and you get to keep yours. That’s the deal. You try to stop us, and we’ll blow both. Mr. Benedict, you could lose $80 million tonight secretly or you could lose $160 million publicly. It’s your decision.”
Mr. and Ms. Landlord: You could lose $500 this month secretly, or you could lose $5,000 this year publicly. It’s your decision.
That said, Cash for Keys doesn’t always work. Some tenants will refuse it. Some tenants will ignore it. Sometimes you just won’t want to try it. In that case, you’ll need to continue the eviction process.
We’re republishing this article to help out our newer readers.
Landlords: Have you ever used Cash for Keys? Why or why not?
Let me know your experiences with a comment!
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