Need Help Cash For Keys

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Need Help Cash For Keys

James Nix
Rental Property Investor · Philadelphia, PA · Member since 2017 · 104 posts · 64 votes

Hey everyone,

So I have a situation where my tenant is currently late on her rent right now. I served her the 10 day notice on the 7th. So she have till the 17th to pay or I file for eviction. But at the time I called her on the 5th on why she didn't make her rent payment yet she gave me a story about her not really doing good financially & that she really not in a position to have an eviction on her record because no one can help her. So I told her I might can have another way to avoid eviction and I'll let her know about it. 

So before I even start to say what I proposed to her let me just say the story she told me is not the only thing that got me thinking about this Cash For Keys strategy I took that from a lot of forums & different podcasts saying its better to just get them out vs paying the eviction fees and waiting and such. 

So I told her if she could moved all her stuff completely out the unit by the 17th & returned the keys to me that we could sign an agreement to break the lease and she get her security deposit back less any remaining balance & fees after 30 days. Also less any damages to the unit.

So my first question for everyone is Am I dumb for doing this? and why 

2. Do I have to go to an attorney to get the form to break the lease or is it something I can get off google?

3. Would you have done this? & if you would how would you have done this differently 

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Erik W.
Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
6y

It depends on what your local court system is like and what this tenant does on the way out if you just evict.  It also depends on how much you are considering paying her.

First, keep this in mind: you don't owe her anything.  Anything you give her at this point should be gratefully received on her end.  All you are doing is controlling how much you are losing.  Think about it this way: she told you she's "not doing well financially."  Okay, so she could have just moved out and asked you for a payment plan to pay off what she owed for breaking the lease early.  That's always an option.  Anything you offer at this point is purely grace on your part.

Next, how long does it take to get her out from the day you file court papers?  2 weeks, 4 weeks, 2 months, etc?  Are your judges likely to give stays on evictions or drag out to a bench trial?  The longer the law gives her to sit in there soaking up free rent, the more valuable it is for you to get her out quicker.  

Finally, having her move out by the 17th.  Is she going to move her entire household somewhere else in 3 days?  Not dumb, but perhaps unrealistic?  Is she going to try to rent elsewhere, or does she already have a place lined up?  Tenants who sit on their hands until they are in trouble are seldom highly motivated "go getters" who can move out in 72 hours.

I've never done cash for keys.  I get the whole cost/benefit analysis side of it.  Call it my sense of justice, but I do not like rewarding people for breaking their word to me and being too lazy to do the right thing by moving out without forcing me to bribe them.  If she "is not in the position to have an eviction on her record", then I'd tell he if she is 100% out by next week Monday (that gives her the weekend to move), I won't file the paper work.  No money paid.  Her "reward" is getting to keep her name clean, and if she is telling the truth about valuing her name, she will make it happen.  If not, then probably best to just evict and send the bill to collections.

Food for thought.

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  • Sandra Page
    Member since 2019 · 10 posts · 2 votes
    6y

    Good afternoon.  

    I have done this so many times over the last 6 years as a property manager and 90% of the times you end up with a clean rental when they leave.  Cash in hand to sign over your keys is a God send to most tenants that fall into this type of situation.

    So, to answer your questions. 

    1) You are NOT dumb for doing this, it is smart.  a) no eviction cost b) cleaned out unit c) you potentially helped this tenant from having future problems with credit and/or renting. 

    2) You do not need an attorney depending on your location.  I have done this in Fl and Ga and just type of a very specific notice that you and tenant will both sign and receive copies of to keep.  Make sure you are very specific and state tenant agrees to vacate property on their own free will in exchange "for lease buy out"  

    Do not hand over cash or signed document until tenant has given you their sets of keys.  Lock the door on the way out the unit and wish them good luck.  I suggested having either a locksmith or your maintenance person change the locks immediately though just in case.  

    We always mail the deposit to the tenants next address so we have time to go through move out process to evaluate their return deposits.  This way we are not rushed and we have the tenants new address just in case.  It has come in handy a few times when the tenant was not happy with amount of returned deposit :) 

    I hope this has helped.  Let me know if you have any questions on my process.  I am always happy to help.

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  • Erik W.
    Real Estate Investor · Springfield, MO · Member since 2017 · 1k+ posts · 2k+ votes
    6y

    It depends on what your local court system is like and what this tenant does on the way out if you just evict.  It also depends on how much you are considering paying her.

    First, keep this in mind: you don't owe her anything.  Anything you give her at this point should be gratefully received on her end.  All you are doing is controlling how much you are losing.  Think about it this way: she told you she's "not doing well financially."  Okay, so she could have just moved out and asked you for a payment plan to pay off what she owed for breaking the lease early.  That's always an option.  Anything you offer at this point is purely grace on your part.

    Next, how long does it take to get her out from the day you file court papers?  2 weeks, 4 weeks, 2 months, etc?  Are your judges likely to give stays on evictions or drag out to a bench trial?  The longer the law gives her to sit in there soaking up free rent, the more valuable it is for you to get her out quicker.  

    Finally, having her move out by the 17th.  Is she going to move her entire household somewhere else in 3 days?  Not dumb, but perhaps unrealistic?  Is she going to try to rent elsewhere, or does she already have a place lined up?  Tenants who sit on their hands until they are in trouble are seldom highly motivated "go getters" who can move out in 72 hours.

    I've never done cash for keys.  I get the whole cost/benefit analysis side of it.  Call it my sense of justice, but I do not like rewarding people for breaking their word to me and being too lazy to do the right thing by moving out without forcing me to bribe them.  If she "is not in the position to have an eviction on her record", then I'd tell he if she is 100% out by next week Monday (that gives her the weekend to move), I won't file the paper work.  No money paid.  Her "reward" is getting to keep her name clean, and if she is telling the truth about valuing her name, she will make it happen.  If not, then probably best to just evict and send the bill to collections.

    Food for thought.

    2Reply
  • James Nix
    OP
    Rental Property Investor · Philadelphia, PA · Member since 2017 · 104 posts · 64 votes
    6y

    Thank you @Sandra Page for your reassuring answer that I am taking the right approach to this.

    But one other quick question. So I know it’s cash for keys so you would think to give you tenant money to move. But is there ever a scenario that you don’t actually pay your tenant move but just give them the option to move without being evicted.

    So my tenant is past due $817 in late rent and fees. And her security deposit is $1200. I can’t just tell her I’ll give you the option of leaving without eviction (no money exchange) then I’ll take the rest of what’s owed to me out your security deposit & send you the remaining portion? (After appropriate amount of days) 

    1Reply
  • Ryan Deasy
    Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
    6y

    @James Nix i have done this many times. it is the way to go. evictions are very expensive and very lengthy at least in my state (CT). make sure the place is cleaned out and keys are in hand before you give them any money or sign any docs. i dont think using an attorney is necessary. this is always my #1 go to strategy. an eviction where i am in 900$ and about 3 months long. more than likely, they are not going to pay during those 3 months and could also damage the property on their way out if they are feeling spiteful. good luck. let me know if i can help.

    0Reply
  • James Nix
    OP
    Rental Property Investor · Philadelphia, PA · Member since 2017 · 104 posts · 64 votes
    6y

    @Ryan Deasy thank you. I was wondering could you just give them back the security deposit back minus rent & late fees owed when they move instead of actually giving them cash & then have to send security deposit back at later date? 

    0Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    6y

    @James Nix  You are not dumb for doing this and yes if you gave her the terms and she agree, stick to it.  I wouldn't return all of her deposit, but I would return the balance after the unpaid rent is deducted and I would do so only after she's moved out, handed over the keys AND you inspected the place.  Life happens.

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  • James Nix
    OP
    Rental Property Investor · Philadelphia, PA · Member since 2017 · 104 posts · 64 votes
    6y

    @Theresa Harris thank you so much that's what I really wanted to get the answer on 

    0Reply
  • Ryan Deasy
    Lender · Farmington, CT · Member since 2015 · 542 posts · 321 votes
    6y

    @James Nix i dont think so. the cash in the cash for keys is usually in addition to the security deposit. you would need to give that back to them anyways. if for some unknown reason they are willing to just walk away with their security deposit then fine. i do not think you can hold the deposit over them as leverage because you owe it back to them anyways. 

    0Reply
  • Jill F.
    Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
    6y

    @James Nix I am in Ohio where evictions are not too onerous. Usually what I do is tell the tenant, }ok here's what I can do for you: you find a new place, if you need your rent money for this month to put down a deposit on the new place go ahead, I'll (3-day) notice you on the 4th and you'll have until the 13th (or within a couple of days of the first day I can file and eviction) to get all moved out. Leave the place broom clean, clean fixtures and appliances, and I'll give your security deposit back (less the daily rent prior to moving day) on the spot instead of taking the 30 days permitted by the state of Ohio. This way the departing tenant use their rent for their security deposit on the new place and they'll get back their security deposit in cash so that they can go pay the new landlord the rest of the move-in funds and then roll up the moving truck at their new place. This permits most tenants to get another place.

    1Reply
  • Sandra Page
    Member since 2019 · 10 posts · 2 votes
    6y
    Originally posted by @James Nix:

    Thank you @Sandra Page for your reassuring answer that I am taking the right approach to this.

    But one other quick question. So I know it’s cash for keys so you would think to give you tenant money to move. But is there ever a scenario that you don’t actually pay your tenant move but just give them the option to move without being evicted.

    So my tenant is past due $817 in late rent and fees. And her security deposit is $1200. I can’t just tell her I’ll give you the option of leaving without eviction (no money exchange) then I’ll take the rest of what’s owed to me out your security deposit & send you the remaining portion? (After appropriate amount of days) 

    Yes, I have broke leases before with my tenants and not given them cash to move out.  One addendum that is included on the lease we do is an early release addendum.  It states that any time the tenant wants to break the lease, they are able to with 2 weeks notice but will be charged an early move out fee of 2 months rent.  Any breach in the lease is cause to not receive any portion of the deposit if we choose.  Cash for keys tenants never get any portion of the deposit back because of the above stated though.  I think it is only fair to us as landlords if we are already saving them an eviction on their record and giving them money to move out.  Hope this answers your questions.  

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