My Clear, Simple “Cash for Keys” Agreement
Whelp, you’ve landed on another awesome Swipe & Deploy post, yay!
Hey there, JP here letting you know that there’s a fresh, hot, and tasty free REI form waiting for you at the end of this blog post.
But first…
I was reminded recently of an important tactic I learned way back in my first year as an investor. It’s a handy maneuver that has saved me heaps of time, money, and hassle since I first learned it, and one you’d do well to have in your bag-o-tricks as well, whether you’re a “keeper” or a “flipper.”
I’d like to share with you my own spin on it, along with the paperwork I use to make it happen.
So, an email I ran across more than a decade ago now, from a local investor reminded me of this tactic and inspired me to share it with you…
Without a doubt, one of the toughest issues any landlord has to contend with on an ongoing basis is dealing with deadbeat tenants, but hopefully with as little pain and loss as possible.
And truth be told, “tough” doesn’t quite cut it — it’s more like ridiculously miserable much of the time. (My fellow landlords… can I get an amen? )
Even non-landlord investors will face this one from time to time…
Let’s say, for example, you snag a killer deal, yours for a song… provided you solve the tired landlord’s real problem by taking over his deadbeat tenant so he doesn’t have to deal with the shyster anymore?
It happens. I’ve done it.
So when it’s time to finally cut the apron strings, what’s the next logical step most of the time?
EVICT.
And sadly, evictions are nearly always expensive, time-consuming, and exhausting.
But… could there be a better way? (Hint: Yes)
One of my early mentors shared an eviction alternative with me years ago that, when you can pull it off, frankly beats the pants off wrangling an eviction. But admittedly, it involves a little pride swallowing that can be challenging at times. (And no, you can’t just turn the power off or remove the front door… but oh, a guy can dream…)
It’s called “Cash for Keys.” And simply put, it’s when a property owner offers the occupants a cash incentive to avoid eviction and surrender the property quickly instead.
In other words: “You give me house, I give you money… OK?”
Now I can hear some of you already…
“Nooooo waaaaaay! Why in the HECK would I want to PAY someone to leave MY property??? Some deadbeat who OWES ME money and doesn’t have the DECENCY to even act humble about it??? Why I oughta…”
There’s no crying in baseball!
Look, I get it… I really do. I’ve been there myself more times than I care to admit. It actually hurts to even imagine the ridiculous injustice of rewarding that kind of behavior.
But get over it.
Look, you’re running a business here, right? And in the end, aren’t you really just trying to turn profits and minimize losses?
The fact is, if you can set your poor hurt feelings aside for a moment and think clearly, you’ll see it’ll almost always be a better deal for you to pay them to leave than wading through the muck of an eviction.
See if this convinces you… 👇
Clear Advantage #1: Weeks 🆚 Months
In my area, a full eviction and set-out take 60 days at a minimum — and in many areas, it’s a lot longer.
If you’re unlucky enough to have a “professional tenant” on your hands (someone who really knows how to work the system), then you have literally months on top of painful months to look forward to enduring.
My “Cash for Keys” offer dictates that time is absolutely of the essence. I’m shooting for a week — 2 tops — for them to be totally moved out, leaving the place in “broom-clean” condition for me.
And trust me, reclaiming your house in weeks rather than months helps a lot in easing your hurt pride over the whole thing.
Clear Advantage #2: Hundreds 🆚 Thousands
In my area, even if I handle an eviction myself (which I don’t recommend), I’ll end up spending $500—$700 to make it happen…
Hire an attorney (which I do recommend), and you’re over around $1,000—$2,000 or so.
And then, of course, for every month you’re dealing with this, receiving no income for your property, you’re still on the hook for those mortgage payments, aren’t you?
The collective bottom line for a full eviction will almost always be in the thousands… much costlier than the $500 or $1,000 your tenant would likely settle for quickly.
Think about it.
Clear Advantage #3: A Non-Trashed House
Remember, part of the deal is they have to leave the house in “broom-clean” condition. Either that or no dice.
Compare that to the tenant who elects to steal all the copper, knock holes in the walls and smear his dog’s poop inside the cabinets on his way out the door…
(…Yeah… trust me, if you’re a landlord and that post-eviction scene isn’t a familiar one to you yet, it’s a matter of when not if…)
Cash for Keys gives me the leverage to help keep budding, expensive temper tantrums at bay.
How to say it…
First off, don’t go in with guns-a-blazing…
No matter how injured you feel or how much it hurts to offer your resident deadbeats your hard-earned cash to leave, you need a level head when you approach them.
Find your inner Zen monk or put on your best thespian face, but do what you can to “come alongside” them, rather than remaining emotionally charged opponents.
The idea is to try and help them see what a good deal it really is for them, and my own conversation typically goes something like this:
“Look, let’s be honest, this isn’t working out. I know we’re both smart enough to see it’s time to part ways. Now I’ve got a powerhouse eviction attorney who’s really good at what he does… but I know we’d both rather avoid all that if possible. That kind of thing can really haunt you for a long time. So here’s another idea, and I think you’ll be happy — it’s a win/win:
Today’s Monday… if you can find a new place to live and move totally out in one week, then I’m willing to cancel what you owe me up to now, and even offer you five $100 bills. I’m willing to do this because, frankly, evictions are a hassle, and I’d rather get a new tenant in here sooner rather than later. And it’s a great deal for you, because you get a fresh start quickly, debt off your shoulders, and some cash to help you get restarted.
So again, (restating for clarity) what I’m offering here is, if you can move out in one week and leave the property in “broom-clean” condition when you go, then I’ll forgive your past due rent and pay you $500 bucks to boot. Would that take a weight off your shoulders and make things a little easier for you right now?”
Now, I don’t use a script or anything, but it typically goes something like that.
The main thing to remember is to NOT be confrontational, no matter how you may feel, and to point out exactly how and why this is a better deal for them.
How to prove it (& cover your butt)…
You need to document this to make it formal and binding. It spells everything out in plain English and keeps everyone somewhat more accountable.
I happen to have a form I’ve used for just such an occasion, and I’ll gladly share it with you, with the disclaimer that, (i) it comes to you “as is,” (ii) should be used at your own risk, and (iii) is not to be construed as legal advice.
Please consult your attorney before using it.
Now it’s time to level up your real estate investing game. Download this helpful doc now.
Here's how…
Step 1 ⤸
“Like” our Facebook page please?
Step 2 ⤸
Just leave a comment below sharing your honest feedback on this “Cash for Keys Agreement” template I'm freely sharing with you. Whatever you think after hearing my thoughts about it in the video above. Good, bad, and anywhere in between. Seriously.
Alternately, I’m also interested in hearing anything else (another resource or tool) that you’d like us to share in a future “Swipe & Deploy” like this. Do tell.
Step 3 ⤸
Then Chuck Norris will hand you over my template.
Totally serious. Just try it. 😀
Now it’s true that eviction is sometimes necessary…
If you have an unpaying tenant who’s also unwilling to cooperate for some reason, then unfortunately eviction becomes a necessary evil you have to contend with.
But it’s also expensive, time-consuming, often confusing, exhausting, and often downright gut-wrenching. Not for the faint of heart.
So I say, whenever possible, make Cash for Keys your FIRST line of attack, and you’ll save yourself heaps of headache, time, and money more often than not.
Finally…
In case you didn't know, we give stuff away like this all the time, like the ‘You Are Late' template for landlords, “The Way Things Work” for landlords, and my option agreement. You can also check out our entire “Swipe & Deploy” goodies category over here that we've compiled over the years to help you level up your REI game.
You got this,
—JP
Liking your various Agreements!
The only other suggestions I have experienced is to continue to build and nurture your tough skin. Because everybody’s going through something. Be Blessed. Always!
this is pure gold for current and future investors thank you !!!
I like the fact that it’s so simple that even I could understand! Thank you very much
Always heard about cash for keys, now I’m getting the know how agreement
I thought this was very resourceful and will definitely be taking some “key” notes (pun intended), also very excited to get the ball rolling.
I don’t like talking to people but I’ll definitely give this opportunity a try I pray that it will work out
I like this idea, it sounds like a winner, Cash for keys, let’s go with it!
so we should expect this as a reason one might want to make a deal.
Cash for keys definitely a show stopper for sure it’s decent and helps both parties win
Well put can’t wait to get started get stuff
Great and Awesome Keys of information
Cash for keys! Thanks
great alternative ;; wishing now I would have done a better background check,, and not been SO HASTY to Rent without 2 months down payment >up front< "Then" I could just offer them Back- One or two Months of there own Money Back as incentive
Great idea…
great content , I hope i will be able to use this
nice work
Your page is really great and helpful. Plus you are also generous with the resources
This is really great and helpful
Yes sounds like a good first attempt at getting the tenant out with much of a fight and saving your property from a lot of damage (you hope) I would like a copy of the agreement. Thanks for being so “Awesome”
I would like that tool in my war chest, I’m sure that would often make good sense in this type of situation
Thanks for the great ideas. Sounds like a big time and money saver to offer them cash
I think the “Cash for Keys Agreement” idea makes sense, and I’ve been pondering something similar for some new tenants that just aren’t working out. I’d like a copy of your agreement.
The Cash for keys idea is a good one. It’s another creative and resourceful investor tool. Thanks
Cash for Keys works most of the time, on rare occasions you will still have to evict I had that happen a few years ago.
It’s nice to see something in print to give them rather than just a verbal agreement.
This could literally save you thousands!
Thanks for the form and the script. It always helps to hear how to apply as well as understand the purpose of the documents.
Good strategy when there is no moratorium on evictions.
If you have a last month security deposit equal to their rent, you’re basically giving them back THEIR security deposit.
This really works well! And with so much less hassle.
Yes! Very smart, such a great idea and I’m sure it works most of the time.
I’m in this exact position right now !!! Thank you for the advise.
Sorry JP, but this may work in a very few cases; we tried for a property we had bought, we even offered the lawyer’s fees ($4000) just to get him out of the property we bought. It took us 14 months and got him evicted by luck as he had forgotten to submit a paper by a certain date – otherwise it would have dragged for another two or three months.
What I am trying to say, try to avoid such an error in the first place, rather thinking that the remedy is easily available; every case can and will be different.
A solid point, and I 100% agree, George — using a “cash for keys” agreement like this is only something you resort to if things go south, and it’s way better to do what you can to ensure things don’t go that way in the first place.
And nothing’s guaranteed. But when things go sideways with a tenant, having this in your bag of tricks can definitely save some time, money and sleepless nights for the times that it incentivizes the tenant.
The “cash for keys” tactic sure saves $. Nothing like being efficient. Time is money.
Very interesting concept in lieu of eviction. Tell me more, I’m listening and paying attention
That is a very important doc to have, save you a lot of money and time. Thank you.
What an extremely clever way to engage the goodness of people (even when they don’t pay) in order to severe the agreement – already broken by the tenant.
Cash for keys does work in most cases. You hope to have smart enough tenants to take advantage of it.
Another great tactic Jp, thank you so much for sharing. I’m gonna put this to work soon.
Another great tactic Jp
It is great to have sucessful people help others.
looking forward to a new journey! cash for keys is a great suggestion .
So much AWESOME information. I can hardly wait to get this party started!
great technique.
thank you
I love the cash for keys plan, heck maybe even go as far as renting them a uhaul to help move them out. It shows compassion and willingness to work with them and that your not a typical tyrannical landlord..
I agree cash for keys is a win win situation for both landlord and tenant. An eviction on record makes it hard to impossible to find a new place to live and should be avoided by tenants whenever possible. It is a horrible look on a credit report. Cash for keys makes total sense. Thanks for sharing,
I’m ready and excited to get my first one day flip
I’m a newbie how do I get a tenant. Real-estate agent or check records at the cities tax area.
I have a suggestion how about a GTR better known as a skyline that’s an awesome vehicle I think at least.
I like the idea of keys for cash because you’re showing that you’re willing to work with the tenant and help then. Even though it’s been a terrible experience. You’re helping them get on their feet some instead of just kicking them out, while also pushing the process of getting the tenant out as quick as possible.
I’ve heard of Cash for Keys before and apparently filed it way back in the recesses of my mind… I could’ve used this recently. Thank you for the reminder and here’s hoping I never have to use it!
Loved your wholesomeness in with legal stuff. Awesome.
Wow!!! I’m a REI newbie. I have been to several “hotel meetings”. However it is truly refreshing to be able to do this at home in my spare time.
This is an “Awesome ‘ idea to pay a tenant to leave the property. I do not own any property yet. But if and when I do this will be a great tool to have in my Awesome arsenal.
Thank you for sharing.:)
I might be able to use this script!
Awesome
Always exciting and beneficial to my biz! Thx
I’ve seen one to many evictions and they are not a pretty site, thanks for sharing from your arsenal.
Greatness! Thx
I love this. I actually thought of paying a tenant to leave before.
Awesome.
Thank you for sharing
Very helpful!
I had questions about this technique. Days away from implementation. Just in time.
Thanks For your helpful advice and content.
The ongoing contribution of creative solutions to real problems for real estate investors is invaluable and greatly appreciated
The ongoing contribution of creative solutions to real problems for real estate investors is invaluable and greatly appreciated
seems an ideal PASSIVE INCOME strategy, for these times
This was gold nugget
Awesome REI is AWESOME they always provide Golden Nuggets. Cash For Keys is such a golden nugget.
Hello I’m super excited for all these great things I will able to use in my journey. Thank you!