If you’ve been a landlord for any length of time, chances are you’ve had to deal with difficult tenants before. Sometimes they become more than a mere difficulty though, and you need them gone. But eviction is an arduous and frustrating process to go through. That’s why last month we gave you some alternative ways to get rid of bad tenants. One of those ways is called a cash for keys agreement.
What some people misunderstand about cash for keys agreements is that they aren’t one-size-fits-all solutions. For one thing, you don’t have to have bad tenants to decide to pay them to leave the property. It’s also not the very last resort when you do have problem occupants. Lastly — and this is important — a tenant payoff won’t solve the root problem if your lessee vetting process is lacking.
Myth 1: Cash for keys is only for problem tenants
News flash: you don’t have to have an awful tenant story to want your current tenants out! This is where a buyout agreement can come in handy. If you’re a landlord who wants to “remodel the property, move-in themselves, or change the lease in order to increase the rent to market rate,” you’re in luck. A buyout agreement is essentially a cash for keys deal accomplished under less fraught circumstances.
This can be a great option when you want to renegotiate the value, purpose, or rent on your property. A buyout agreement can help you hit reset on a property, and it’s going to bring much less anxiety in almost all cases.
Myth 2: Cash for keys is the only way to save yourself from a complete loss.
You rented to the wrong people. And while you know it now, that doesn’t really help. Sure, this experience may make you more careful about getting burned in the future, but what about right now? When you’ve exhausted everything within your legal limits, a cash for keys deal may seem like your only recourse, but that’s not necessarily the case.
Instead of taking a financial hit just to push out your horrible tenants (And honestly, doesn’t it boil your blood a little to let the bully win?), you could actually get on the receiving end of some cash by selling the property to a reputable home buyer.
Folks often ask if they can really sell a property with tenants still living in it. While it may sound too good to be true, that’s exactly what companies like our own can offer. Instead of giving in to the tenants or losing money on the deal, you have the option to look at a free cash offer. Here’s what landlords get out of the deal:
- No post-tenant cleanup and renovation
- No more dealing with the tenants
- Cash in hand
Maybe it’s your best option this time around. Maybe it’s not. A lot of that depends on how bad the tenants are to be honest. And how much you’re willing to deal with. But rest assured, whatever they’ve done to the place, as a professional family renovation team, we’re thrilled to buy your property and we’re ready to fix it up.
Myth 3: It will solve my tenant problems!
Sigh. Unfortunately, no amount of buying out or paying tenants to leave is going to stop more bad tenants from renting your properties. You know what will though? Better vetting! If you’ve been lax about background and employment checks, it’s time to change that. More intensive screening and interviewing will save you so much headache in the future. It will also ensure the only cash for keys agreements you make in the future will be on your terms.
As a landlord, you have a tough and often unusual job. We know you usually have to wear multiple hats and deal with a variety of personality types. Why make it harder on yourself than it needs to be, right? If you’ve been cutting corners on screening, consider upgrading to a more robust tenant screening service.
When Is Cash for Keys the Smart Choice?
It can be a financially viable move if you want to renovate or raise rent. In the case that you aren’t interested in renting the place at the moment but want to keep the property for whatever reason (saving on your child’s dorm rental prices through college, for instance).
Just remember: sometimes paying off a lessee to get them out really is your best option. But it’s not always your best. You may be stressed and ready to cave, but there are always options. Take a deep breath, do your research, and remember… you’re going to get through this before you know it!