As the owner of a rental property, eviction is never a fun prospect to have to consider. Maybe it’s an
the issue with a tenant adhering to their lease conditions or having numerous missed rent payments.
Regardless, evicting problematic tenants is a natural part of ensuring landlords and rental property
owners profit from their real estate investments. For landlord and rental property owners seeking an
alternative to the lengthy and often expensive eviction process, there is the option of offering tenants a
cash for keys resolution. While this may be a non-conventional approach to replacing tenants, there are
many benefits to choosing a cash for keys agreement.
In this article, we’ll answer the question of “What is cash for keys?” as well as some guidelines for
coordinating cash for keys agreements and general tips for success. With the help of Highlands
Investment Group, you’ll be able to learn an entirely new strategy for managing issue tenants.
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Tips for Offering a Cash for Keys Agreement
While understanding what cash for keys means is simple enough, there are numerous guidelines for
moving forward with a cash for keys arrangement to guarantee success in removing tenants from a
property. Here are some of our tips for a cash for keys agreement.
Open Communication
Healthy communication between all parties is needed to ensure everyone is on the same page for
tenants and landlords. Especially for a situation in which a tenant is eligible for eviction, communication
is a legal requirement for any decision that will affect the tenant’s living situation. Explain to tenants
that they will be evicted, making sure to include details of the circumstances, potential expenses, and
impact on their future probability of finding a home. Finish by introducing an alternative arrangement, a
cash for keys agreement.
Answer the Question “What is Cash for Keys?”
While banks or landlords may understand what cash for keys offer is, you can never assume the same
for your tenants. After explaining that the tenant is at risk of eviction, which can be time-consuming and
detrimental, answer any questions about how the cash for keys agreement works. Cash for keys is legal in
all 50 states, often encouraged by courts to help landlords settle disputes externally and benefit all
parties involved.
Arrange a Written Agreement
For any real estate or rental property scenario having everything in writing is highly suggested. Cash for
keys is simply a nickname for a private written agreement between tenants and rental property owners,
and the contract isn’t official until there is a signature from both parties. Having cash for keys
agreement in writing is important for protecting yourself against potential legal issues and ensuring
tenants are on the same page regarding payment amounts and move-out expectations.
Follow Up on Moving Day
The entire point of a cash-for keys arrangement is to make sure that tenants vacate the property. After
all, you’re only offering payment under the circumstances of being able to begin the turnover process
sooner. The most crucial day of cash for keys arrangement is the tenant’s move-out day, so make sure
to follow up and ensure tenants have moved out at the agreed-upon time.
Act as if Property is Already Vacant
Once the private cash for keys agreement has been signed by both parties, there is no reason for the
rental property owner to wait to begin the turnover process after the agreed-upon move-out date. A
cash for keys arrangement allows landlords to proceed with the property as if it’s already vacant,
meaning they can change locks and begin turnover service at the date and time the tenant
communicated they would be gone.
Cash for Keys Agreement Form
Perhaps the most crucial element of cash for keys agreement is ensuring everything is in writing
through the cash for keys agreement form, often referred to as cash for keys letter. The agreement form
will include the circumstances for eviction, the amount of money the tenant will receive for vacating,
how the tenant can expect to receive the payment, and the tenant’s move-out date. Rental property
owners will usually also include a stipulation that both the landlords and tenant will be present on
moving day to assess any potential damages, which affect the payment amount.
Cash for Keys Payment Amounts
As far as the amount the tenant receives within cash for keys agreement, it will highly depend on the
rental property and specific tenant circumstances. The average tenant eviction process costs around
$3,500 in lost rent payments and court/attorney fees, as well as potential damages. The goal of the cash
for keys offer is to avoid these steep fees by instead offering a lower cash amount.
Generally speaking, landlords should start low and openly negotiate a higher amount to get keys from
tenants if needed. Some view $500 as a great starting point, while others will offer half of a month’s
rent with their security deposit as well. Landlords can be flexible with this offer to provide tenants with
an incentive that will be more profitable for the rental property owner in the long run.
Cash for Keys Mistakes
While cash for keys offers can be great for landlords and rental property owners looking to skip the
eviction process and expedite tenant turnover times, there are many ways to complicate matters when
choosing this alternative. Here are some of the most common mistakes landlords make when offering
cash for keys to potentially evicted tenants.
Self-Evictions:
When landlords take matters into their own hands by manipulating tenant utilities or
locking them out, they can get in deep legal trouble. Harassment will not hold up in eviction court. Make
sure to keep emotions out of the eviction process, regardless of cash for keys agreement or not.
Too Much Negotiating:
While landlords should be a bit flexible when negotiating cash offers, they
should never forget who the captain of the ship should be. Make sure to have a maximum amount set to
avoid over-negotiating.
Financial Messiness:
Document all payments made and received. To keep an accurate record, landlords
will often pay with a check rather than physical cash (despite what the name indicates). Guarantee all
parties have a receipt of the payment. All security deposits should be returned if the property hasn’t
experienced superfluous damages.
Highlands Investment Group Can Help Sell Rental Properties!
If you’ve found yourself at any point in the cash for keys process, consider selling your rental property!
We can purchase your rental property with the tenants still in place so you don’t have to worry about
evicting them or coming to cash for keys agreement. With extensive experience with difficult tenants,
deferred maintenance, we specialize in purchasing rental properties and putting you in a position to
maximize your rental property investment. Contact Highlands Investment Group today!]