Owning rental property provides many opportunities but always presents issues. As a landlord, you depend on your tenants to make monthly rent payments to cover the mortgage and to profit. Life tends to play by its own rules, including presenting hard times. A paying renter can easily face life problems, leading to no payments and becoming a squatter. Immediately deal with this non-paying tenant to avoid losing serious money on your investment property. A standard route besides court to handle a non-paying individual who once had a lease is a cash for keys agreement.

What is Cash for Keys?

The concept of cash for keys explains itself. It refers to giving a non-paying tenant or squatter money for the keys to the house. Additionally, all parties sign an agreement that in return for the property keys the former tenant does not enter the property, or it’s considered trespassing. This route allows a quick resolution to a non-paying individual without bringing things to court.

On average, cash-for-keys can consist of a few hundred up to a few thousand dollars. However, it can save the landlord court expenses, including hiring a real estate attorney for the eviction.

How Does Cash for Keys Work?

At times, cash for keys can be difficult if the individual isn’t responsive. Furthermore, many times the squatter prefers staying in the property until the process of bringing to court begins. If you’re a landlord who wants to skip a multiple-month eviction process, cash for keys should be considered.

A homeowner can complete the cash-for-keys process with or without a lawyer. Just use the proper agreement and legal documents. The landlord will meet with the former tenant and sign the form. It’s suggested to have the real estate documents notarized. Additionally, another route to verify the documents will be to take a photograph or video of both sides signing. Once they hand over the keys and remove personal items, change the locks on the doors. If the individual enters the property after receiving the money, they may face criminal charges.

Pros and Cons of Cash for Keys Program

Weigh out the pros and cons of paying cash for the keys to the rental property. Not every situation is the same and consider all factors before making this massive legal decision.

Advantages of Cash for House Keys

• The ability to avoid the court process, which can take up to six months and cost thousands in fees.
• Legal right to file trespassing charges if the individual reenters the property.
• If it’s desired, sell the property. The homeowner has the opportunity to sell the house vacant, increasing the overall value.
• Limit the number of utility bills used, saving money in the long run.
• Possibility to limit the amount of property damage caused by the former tenant. Money is motivation and may demand a better level of respect.
• The amount paid when conducting cash for keys can be tax-deductible.
• Not only for squatters, but also used in other ways. Furthermore, if a landlord wants to break a lease to make home renovations and raise rent, or sell the property.

Cons of Money for Property Keys

• No landlord wants to pay an individual to leave their rental property, especially if monthly rental payments stop.
• The squatter can demand more money than what’s originally offered.
• Still run a chance of the tenant damaging the property, including unseen damage to sewer pipes.
• The overall cost to remove the individual from the house. However, taking a squatter to court may allow for the judge to place a lien. The lien will force the individual to pay the homeowner back. Additionally, the lien can consist of court fees or lawyer expenses.
• Not using the correct forms. Utilize the correct documents or the individual can take the cash-for-keys and continue to reside in the home.

Alternatives to Giving Money for Property Keys

Some homeowners may not feel comfortable with a cash-for-keys program. Why pay a non-paying tenant cash to exit a property you own? Additionally, these non-paying individuals can cause more issues or renege on their part of the agreement. There are some alternative routes to paying for access to your property.

Cash buyers purchase homes as-is, including properties with squatters. When selling a property with non-paying tenants, the overall sales price is lower than the market value. However, the process of getting these individuals evicted doesn’t exist. Additionally, a realtor can list the property for sale, but selling the traditional way can take weeks or months.

Another option, most people’s last resort taking the non-paying individual to court. The least desirable route since it costs both time and money, but at times, the only option. If the judge rules in your favor, the court can place a lien on the individual’s wages. Additionally, the lien can consist of real estate attorney fees and other relevant court expenses. Lastly, before making your decision weigh out your options and talk with a real estate professional to see the best way to go about things.

Is Cash for Keys Worth it?

Yes, cash for keys can be worth the money and effort. Sometimes, the only way to quickly remove an individual is to offer money for the keys and rights to the home. Cash for keys in Philadelphia has an upfront expense of hundreds to thousands of dollars, but it may save money in the long run. An eviction process can take months and can be emotionally draining. Discuss factors such as rental rates and the average eviction process when determining the worth of cash-for-keys.

Don’t approach the cash-for-keys solution alone; ensure the right legal documents are being used. If the forms are inaccurate, the squatter can keep the money while staying on the property. When signing the cash-for-keys agreement, take photos or a video of both sides signing for additional proof.

Each situation is different; a method that works for you may not work for your neighbor. Furthermore, calculate the expense for each route before making a decision. Lastly, obey the law and always conduct business as a professional.