Cash for Keys is a controversial process. Cash for Keys is the strategy of giving your tenants money to surrender keys and vacate the property, avoiding the eviction process altogether. We have used this technique a couple of times over the years and found great success. However, before throwing money at your tenant, let’s talk about the specifics.
Before we get into the specifics it’s worth pointing out that the best way to avoid eviction headaches is to thoroughly vet your prospective tenants by running in depth background checks, calling and speaking with prior landlords, especially owners of properties not referenced in the rental history the tenant provides, calling present and past employers, etc.
With that said, 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 and a half if not longer. It could cost you several thousand dollars in legal fees to do so, on top of the lost rent for at least two months, maybe 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:
- Explain to the tenant in detail what they need to do. We tell them that the unit must be in move-in ready condition when they leave, so they have to clean it and repair any damages. is saves on clean-up costs and reduces the chance that the tenant will damage the property on their way out.
- Give the tenant a specific date they need to move out by. Typically, we don’t recommend giving the tenant any more than four days to move out. The point of Cash for Keys is to get them out of the property quickly.
- Give a Pay or Vacate Notice anyway. We’ll talk about this form in a moment, but just in case they don’t leave, you will not have lost much time. This is typically the first step in the eviction process, and you should get it started in the event that the tenant does not leave.
- Meet with the tenant. Next, meet the tenant at the property and verify that the unit is, indeed, “broom clean.” To be safe, make sure to take someone with you.
- Inspect the property. Make sure the tenant lived up to their end of the bargain… the home should be cleaned out and in good shape. If not, show the tenant what needs to be done, and tell them you’ll come back in several hours/days to try again. Never give the tenant money until they are 100 percent out and have turned over the keys.
- Sign the paperwork. Have them sign a simple document that relinquishes their tenancy at the property. This will protect you in case they later say you changed the locks on them or that they did not really move out. Make sure they sign and date the document.
- Hand over the cash. If the tenant has held up his or her part of the deal, hand over the money and thank them for a positive transition. Wish them well on their way! Then get into the house and change the locks immediately.
Is Cash for Keys for You?
Yes, Cash for Keys stings your pride. It feels 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!
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 offer a complete line of Property Management Services serving individuals, institutional investors, as well as builders and development groups, delivering to each the dependability, luxury and time-honored services they have come to know and expect from our name and reputation. For more information on our Management Services you are invited to call us at 614.332.6984.
For additional information on the Ohio Eviction process, or for assistance evicting a tenant from a property located in Ohio we recommend Ohio Attorney Michael Cox of the Cox Law Office, 614.562.0945.