What is Cash for Keys and how to avoid damage by tenants?
Are you facing a challenging situation with your tenant, such as pending eviction, significant rent arrears, or an irreparable relationship? If so, traditional check-out procedures may not suffice. Consider using the “Cash for Keys” strategy, where you offer a cash incentive to the tenant in exchange for vacating the property within an agreed-upon period and returning the keys to you. This approach can facilitate a swift, peaceful resolution that benefits all parties involved.
Relieving the Pressure in the Pressure Cooker
Although the cash amount and timeframe may vary depending on the circumstances, the ultimate objective is to ease the tension between you and the tenant and have them vacate your property without causing significant harm. This approach may assist in altering their perception of you as an adversary, or by providing them with the means to secure alternative living arrangements, they may relinquish their resentment towards you. While some individuals may view Cash for Keys as an act of surrendering to a problematic tenant, it can frequently prevent more severe harm from befalling your property. Though you may still have to contend with some cleaning up, it is preferable to the possibility of your property being set ablaze by an irate former tenant.
Make a Cash for Keys Agreement
When implementing a Cash for Keys arrangement, it’s important to ensure that the tenant consents in writing to vacate the property and leave it in a “broom-swept” condition. Certain investors may demand that the tenant restore the property to move-in-ready and handle any required repairs. Additionally, it’s recommended that you have the tenant sign a Pay or Vacate Notice. This will enable you to initiate the formal eviction process promptly if the tenant fails to vacate the premises without wasting much time.
Move Out Day
As a part of the agreement, it’s important to provide the tenant with a specific move-out date. Additionally, it’s necessary to arrange a meeting with the tenant at the unit to assess the condition of the property. If the unit is not in good shape, it’s crucial to show the tenant what needs to be done and allow them a couple of hours to rectify the issues.
It’s important not to release any payment to the tenant until they have completely moved out and returned all keys. It’s crucial to bear in mind that the tenant may be hostile toward you, so it’s important not to compromise your safety during the exchange. To protect yourself in case of any legal disputes, it’s advisable to have the tenant sign a simple document that relinquishes their tenancy. This document can serve as evidence in case the tenant accuses you of changing the locks at a later date.
Watch Closely After Move-Out
Once the tenant has fulfilled their obligations in the agreement, it’s important to compensate them and express gratitude for a smooth transaction promptly. However, it’s crucial to change the locks without delay after they have vacated. Secure all windows and doors and closely watch the property for a few weeks following the tenant’s departure.
There have been instances where tenants move out but later break in and cause damage to the property, such as stealing appliances, a furnace, copper water lines, and electrical equipment. This happens because their belongings are no longer on the premises.
Benefits of Using the Cash-For-Keys Method
Cash for Keys is a cost-effective alternative to paying for an attorney during an eviction, which can cost an average of $5000. By comparison, Cash for Keys typically costs only $500. This method also leads to a faster clean-up and turnaround time for re-renting the unit. In contrast, the damage left by an evicted tenant is often more severe than the wear-and-tear in an amicable resolution. Cash for Keys can quickly remove a non-paying tenant from the unit, often within a week or so, preventing additional rent losses. Additionally, this approach can help you avoid the damage that an evicted tenant might cause, which can range from the thousands to a complete loss and is typically not covered by insurance.
Although it may appear that the “bad guy” is escaping without facing consequences, this approach significantly reduces the risk of incurring a devastating loss that could jeopardize your investment in the long run.
The amount of money offered for “cash for keys” varies but is typically less than the cost of an eviction. The landlord and tenant sign a mutual agreement, and once the tenant moves out and returns the keys to the property, the landlord pays the agreed amount.
“Cash for keys” can be beneficial to both parties. The landlord avoids the lengthy and expensive eviction process, and the tenant receives a monetary incentive to move out, which can help with relocation costs.
However, it is important to note that “cash for keys” should not be used to force a tenant out of their home illegally. The agreement should be voluntary and fair, and both parties should be aware of their rights and responsibilities.
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