Evictions can be a long and costly process for landlords. Landlords can use the cash-for-keys method instead of evicting a tenant.
Rental income is a popular way for real estate investors to build wealth. Renting out a property can create an additional income stream that helps to pay off debts faster.
What if the tenant does not pay rent, or damages your property?
There are always risks associated with any investment. The risk of tenants not paying is one of the biggest setbacks for landlord. Investors lose money when tenants do not pay and must spend time on a long (and expensive) eviction.
How can you overcome the problem of evictions then? Cash for keys is one solution. We will explain what cash for key is today and how to use it as an effective alternative to evicting your tenants.
What is Cash for Keys?
Cash for keys is a popular option when an investor wants to get rid of a problematic tenant or deliver the property unoccupied at sale. Cash for keys can be a good alternative to expensive and time-consuming legal actions such as eviction. Landlords have already enough to do. Cash for Keys simplifies evictions so that landlords can regain control of their properties.
In exchange for a certain amount of money, the landlord suggests to the tenant they leave the property. Evictions are usually necessary when a tenant cannot afford to pay rent or is mistreating a property. Cash for keys can be cheaper, and it helps the landlord to move on.
You can enforce the cash for keys.
You should first draft an notice of eviction before enforcing the cash for keys. Tell your tenant that you are serious about going to court if necessary. You should however encourage the conversation to include alternative methods, such as cash for keys. You should give your tenant an eviction date, but also mention that you have a better option.
It is important to have a direct conversation with your tenant before enforcing the cash for keys policy. You should carefully explain the consequences of an eviction. Tell tenants that evictions will remain on their public record for many years. It is important that tenants understand how difficult it will become to find another home following an eviction. Once the tenant has understood the negative effects of an eviction you can move on to the alternative solution, cash for keys.
How can you encourage a tenant to leave a property?
Cash for keys sounds like a better deal at this point than going to court. Cash for Keys should be documented in writing. This includes the amount agreed upon, the date, the time and any other relevant details. Next, mention the incentives by stating if the security deposits will be paid to the landlord or tenant. Be clear about the settlement terms and how tenants will be paid when they leave your rental home. It’s easy to see why a landlord would get angry because they lose money if tenants don’t pay. The landlord may shut down utilities or limit the tenant, which will upset them. Tell the tenant that you will not make their situation worse if they accept cash in exchange for keys. Negotiations should be kept low and communication constant until both parties reach an agreement.
Cash for keys is legal.
Cash for keys in all 50 States is legal, but you must follow the correct procedure and document your entire transaction. It’s always a good idea to speak with a lawyer to make sure you’re following the law.
Cash for keys will help tenants prepare to find a new house. If you want to be safe, do not harass or mistreat tenants – even if they are causing you frustration and money loss. It is important to reach an agreement that will avoid court. Both parties should be happy with the deal.
Using better solutions
Cash for keys is an alternative solution that helps both the landlord and tenant move on without going to court. Cash for keys can be a solution to help both landlords and tenants move forward without having to go through the court system. Cash for keys can be compared to a settlement, which will save you time and legal fees. This strategy will help you succeed as an investor by reducing the risk of failure.
Sundae is not a provider of legal, tax or investment advice. This material is only for informational purposes. The material has been created without taking into account the financial situation and goals of those who will receive it. Sundae does not make any representations or endorsements about the accuracy or suitability of information from other sources. For guidance on how to evaluate specific investments or strategies, please seek out the advice of a tax professional, financial advisor and/or attorney.