A cash for keys agreement is one of my favorite agreements and also one of the most underutilized. Landlords are quick to evict a tenant but there is nothing quick about an eviction. If you’ve always wondered whether a cash for keys agreement would work for your situation – read on.
Cash for Keys Agreements Save Investors a TON of money.
Removing someone from your property using the court system is EXPENSIVE. Hiring a lawyer to evict or eject (read more about the difference in this blog post) is expensive – easily to the tune of several hundred dollars. Not to mention the amount of time it takes to get a court date! In New Jersey, for example, it can easily take 4-6 weeks just to get a hearing. Then you have to wait another few weeks until the sheriffs can come out to remove the people.
In the meantime, you’re bleeding money with all the holding costs of a home where the tenant that isn’t paying or isn’t getting renovated to be flipped.
Mortgages, hard money loans, insurance, property taxes… all those bills still have to get paid even if you aren’t.
A cash for keys agreement is fast and in real estate, time = money.
The sooner you can get the property vacant, the sooner you can:
Get a paying tenant in the property
Begin renovating the property to be flipped
Cash for Keys Agreements Make Both Sides Happy
Do you know how rarely that happens in an eviction proceeding? Next to never. Evictions stay on a person’s credit history and can make it a lot harder from them to find future housing. If a tenant get’s evicted they have nothing left to lose at that point. That’s when
The reason many tenants or homeowners refuse to leave is because they don’t have the money to put down on a new place. If you can give them some funds to use towards their first month rent or security deposit, you can get them out of your hair.
What if They Don’t Leave?
If the tenant or homeowner doesn’t leave the property, then you will have to use the court system to get them out. Even though you have a contract in place, you wouldn’t sue them for a breach of contract. You would have to either evict or eject them.
I go over how to reduce the risk of the person staying in the video training that comes with my DIY Cash for Keys templates.
When Should I Use A Cash for Keys Agreement?
You can use a cash for keys agreement to:
Remove a former homeowner from a property you purchased
Remove a tenant who isn’t paying rent
Remove a tenant who you inherited but don’t want to keep