My "Cash For Keys" Strategy For Dealing With 100's of Stubborn Tenants/Squatters/Fam

[Dan Gandee]

I'm not the first to talk about this strategy and won't be the last so feel free to chime in here. Over the past decade of deploying a very successful BRRR model across the Pacific Northwest, I've been able to perfect my "cash for keys" process. But before I give you my play-by-play, let me first overview what this concept includes for anyone new to property management or owning rental properties.

**DISCLAIMER: "Always seek legal counsel regarding tenants rights in your state and speak with a trusted and licensed property management company before doing any of this!**

"Cash for keys" is a strategy that landlords can use to encourage a tenant to vacate a property without having to go through a formal eviction process. This can be a useful tool in situations where a tenant is uncooperative or unwilling to leave, but it's important to approach the process carefully to ensure that it's successful. 

Here are some strategies that I use for cash for keys with a stubborn tenant:

Start by having an open and honest conversation with the tenant. Explain why you need them to vacate the property and the benefits of accepting cash for keys, such as avoiding the eviction process and potentially receiving a financial incentive to help with moving expenses. Ask them questions on what they ultimately need to make the move - is it time? is it money? is it links to available rentals? Dig into what they need and see if you can provide the administrative support as I mention in #4 below. Next, ask them if you can inspect the property for any damage prior to agreeing to the payment amount. Take pictures and measure your risk/reward. The walkthrough can play a critical role in determining compensation. Many investors skip this step because they are so "stuck" on getting the tenant out. 

Determine a fair amount of money to offer the tenant in exchange for vacating the property by a specific date. This amount should be enough to provide a financial incentive for the tenant to leave but not so high that it becomes prohibitively expensive for you as the landlord. In Oregon where I own most my properties, relocation fees for no-cause evictions is one months rent. I typically provide that as a starting point and then assess my situation/budget for the BRRR/and timeline for my next move with the investment.

Put the agreement in writing. This should include the amount of money being offered, the date by which the tenant must vacate the property, and any other terms and conditions of the agreement. Let them know that your "attorney will draft it" so they know you have legal means if things go sideways. Make sure it's signed prior to you handling the compensation. A good way to do this is have it electronically signed the night before you meet with them to exchange money. Get their email addresses and draft the documents. Inform them that loitering or come back to the property will constitute trespassing. 

Consider offering the tenant additional support, such as help finding a new place to live or arranging for movers. This can make the process less stressful for the tenant and increase the chances that they will accept the cash for keys offer. I will even go as far as paying for the UHAUL for local moves and using the proactive scheduling method..."So how does Saturday, March 7th work at 10AM? I'll have the truck here for you and I'll help you guys move. Play ball with them.

Be prepared to follow through on the agreement. If the tenant accepts the cash for keys offer, make sure you provide the agreed-upon amount of money promptly and follow through on any other commitments you made. This can help build trust with the tenant and ensure a successful outcome. I typically have a cashier's check from the bank with the tenant(s) name on it. I'll then take a picture of it in their hands so I have proof it was provided.

Make sure to have new locks installed the day the key transfer happens. I typically wait at the property until the locksmith or handyman has rekeyed the entire property. Helpful hint here - Always install key code locks that can be reprogramed. Then a locksmith isn't necessary.

Don't forget to transfer all utilities to your name the same day as key transfer! No internet = no tenants a lot of the times...

Ensure them you'll leave them a fair reference if any future landlords contact you about their tenancy. You should notice I didn't say "Positive Review" or "Great Review" - this is critical to the psychology of such statement.

Overall, the key to using cash for keys successfully with a stubborn tenant is to approach the process with empathy and open communication. By being clear about your expectations and offering a fair financial incentive, you can increase the chances that the tenant will accept the offer and vacate the property without having to go through a formal eviction process. And always remember evictions can cost typically 2X-5X than CFK's - But your time is the most valuable LOSS in this all!