Using Cash for Keys to Get Rid of Problem Tenants

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Building a profitable buy and hold rental property business can be tough. A lot of folks fail to treat real estate investing as a business and end up getting into trouble. Having systems and following those systems is so important if you are to be successful and keep your sanity. It’s pretty easy fly by the seat of your pants when you only have a few properties. Later on when you have added more rentals, it gets much harder.

In the beginning when I bought my first few rentals, I set myself up to have tenant problems. To be blunt about it, I was just too nice.  You hear so many “sad stories”, and you want so badly to believe them. It takes a little while but you eventually learn that some of these folks are master storytellers, and they really know how to work the system.

Your Tenants Haven’t Paid Their Rent (Again)

One of the biggest problems landlords face is what to do about tenants that don’t pay their rent.  Tenants will tell you they will have the rent tomorrow, next week, or you just fill in the blank. And, some of them will actually do what they say. A larger percentage probably won’t.  We all know that you can evict them, and that is what may eventually have to happen.

If you are a landlord that gives tenants a grace period of a few days and they still haven’t paid at the end of the grace period, you should immediately send them a 7 day letter. Always begin the process right away and assume that you will be heading for an eviction. In most states the courts are more interested in protecting the tenant than the landlord, so be sure you know the law and what you are required to do to get them out of the property in the event that they become delinquent.

Every day a tenant stays in the house without paying is costing you money. Not only is it costing you money in lost revenue, there is a high probability that they will damage the property. Evictions and set outs are nasty events, and I don’t like them. Most tenants that can’t or won’t pay the rent aren’t going to pay the costs associated with an eviction even when these provisions are in your lease.

I figured out early on that it was almost always cheaper to pay them to move than to fix a damaged property and pay legal and court costs.

Find Out What the Problem Is

The first step is to find out what the problem is, and it’s important to remember that you need to move quickly. In most cases, I believe that if you can work out an arrangement with a tenant that has been a good tenant in the past, this is better than finding a new and possibly worse tenant.

But if the tenant has lost his job and there is no way he can get caught up or pay future rent, then he needs to move. After the tenant has stopped paying rent, he may just decide to stay until he is forced to move and this is what you don’t want.

Using Cash for Keys

Once you have determined that your tenants need to move, find out what it would take for them just to leave. A technique that many landlords will use is dubbed “cash for keys,” where you essentially offer to pay the problem tenant to leave in hopes that they will do so “nicely.”

Sometimes they will say, “I just need to be released from the lease”. Other times they won’t have the money to rent a truck to move, and you can offer to pay for the truck rental. If they are being really difficult, you might offer to pay them an amount to equal to one month’s rent and release them from the lease. You have to ask them what would make it possible for them just to move on. Trust me, it’s always cheaper to do cash for keys than go through the eviction process and repair the house.

The next step is to draw up paperwork that states the terms you agreed upon and add a couple of things to protect yourself. You need to specify that the property will be left broom clean with no garbage on the interior or exterior, and state that there will not be any damage to the property.  Also I always instructed the tenants to have the utilities taken out of their name, and I checked to see that this was done. I might add that I never had a tenant agree to the cash for keys process and not follow through.  My procedure was to meet them at the property so we could inspect it together. I would get the keys and give them the check if everything was OK. For me, this was a lot less stressful than an eviction.

About Author

Sharon Vornholt

Sharon has been investing in real estate since 1998. She owned and operated a successful home inspection company for 17 years. In January of 2008 she took the leap of closing her business to become a full time real estate investor.


  1. Jeff Brown

    Hey Sharon — In places like CA, cash for keys is cheaper both in time and money. Been there, lived that. In states like TX however, tenants go in knowin’ in their hearts that the judges will help the landlord get ’em out quickly and efficiently. Texas respects everyone’s rights to be sure. But they respect the (cliche alert) sanctity of the contract too. The first time I saw it in real life, I got a bit glassy eyed.

    How’s your state? I’ve not been there. Thanks

    • You are looking at about 2 months here. After your 7 day letter, it takes about 3 weeks on average to get a court date. (You have 30 days here to call the Sherrif here). It take a about a month to get a set out date. The judges here make sure that the tenants are protected and look carefully at your leases etc. I guess all in all, it’s not too bad Jeff.

    • Hello Folks,

      I would like tyo approach this process from the other side if I may just to get an idea about personal exposure etc. My wife and I have been good tenants for five years +, we struggled for the first year and paid rent loate a couple timees but eventually stabilized and have had no additional issdues. We like our Landlords but as 2 mature adults me 49 her 53 we have no allusions that this is a business relationship. We do not party, have never had law enforcement on the scene, do not play loud music and have NO shady visitors. My wife is permanently disabled and I quit my job 3 years ago and took advantage of an offered county program whereas with some training I would be able to take care of her and the County of Riverside allots me an hourly rate to do that. Without that additional revenue I dont know what we would do.I guess I could have just said we are both on fixed income which is a boon for a Landlord because its a rent paid guarantee…. So we received a PERSONAL letter on Aug 10th stating that they (The Landlords) are in financial trouble and in lue of loosing the property to the bank they where placing it as a short sale and requested we move by Sept 7th, Noiw all niceties aside this is near impossible for us to achieve. I have looked at most of the law regarding this and it appears that she cannot do this and in fact here in California the laws seem to greatly favor the tenant even to the point of taking serious advantage. Now we are good people and raised correctly, we do not want ‘Something for Nothing” but we obviously cannot allow her to exploit what rights we do have to such a drastic disadvantage to my wife and I. What would be a reasonable approach to this issue. I am proposing she allows us an additional 60 days to vacate and allow us no rental payment for the final month so we can have the capital to move to an acceptable place. Any thoughts on this. Can you advise me as Landlords how you would respond to an arbitration of this manner?

    • Hi Dave – I ask them what it would take for me to let them out of the lease and move on. Sometimes you just have to let them out. One fellow said “$200”, and I said OK. The most I have ever paid is an amount equal to one month’s rent.

      Just ask them. The amount may be less than you think. One time the family wanted $59.00 to rent a truck, so you never know.

  2. Sharon:
    Fabulous post about a process most landlords have never considered. The time and mental stress this saves is amazing.

    The majority of tenants who don’t pay are going to wait as long as possible to move. When you offer “cash for keys,” they’re typically surprised and thrilled. It’s something they’ve never heard of and most jump at the chance to get paid to move.

    Thank you for your post.

  3. “You have to ask them what would make it possible for them just to move on. ”

    This advice is golden. I hear so many horror stories for angry tenants destroying the property and the landlord end up losing his/her shirt. Your method is definitely more tactful.

    Thanks Sharon!

  4. My tenant drove me out of the house recently. I am living in a friends basement. He gave me three days notice that he was leaving. On the end date, I asked him to leave me the keys so that I can show the apartment the next day. He was infuriated. He said that now he is not leaving unless I fill out a rental assistance form for him that states he is a tenant there for the month after he leaves. i refused. He hit me in the head. Cops came. They said they couldnt do anything since he wasnt opening the door. But another incident and it will warrent me to open it.
    That happened Nov 30. Hes still there and threatening me, actually forced me to leave in fear. Now all I can do is wait. If I had the money Id offer it to him at this point. I hate to be victimized and bullied. I can only imagine what hes going to do to the apartment. Scared and shaking in good old NJ. Where you are a prisoner if you own your home…..

  5. Hi, Interesting action and never thought of that. I live in South Africa and believe me I bet your laws don’t come near ours..oh well, just thought i would mention that ir read where someone had the tenant sign a KEYS LEASE so when they defaulted he had the keys returned to him and thus bypassed any Lease laws…I’n not sure of the legality of that though. have you heard of the like?..regards..fred

  6. Hi Sharon,
    Very interesting to read you. Could you please advice me on what to do with a bad tenant like this?
    Always pay rent late if she has to pay it sometime around 19th of the month now she has
    Stopped paying since December 1st 2013 so own me December and January right now
    Her lease will end on March 16th 2014 but we agreed that she can move out before then. She has on month deposit paid before moving in.
    Since she no longer taking or return my calls or text msg. Please advice me on next step to take for my keys. Thank you.

  7. Amina –

    If she won’t answer or return your calls, I would hand deliver 2 letters. I would put one copy of the letter to her mailbox and tape one up on her door.

    You can tell her that you will (put whatever you want to say ) and then tell her in order to avoid the eviction procedure (which will prevent her from renting at many places), all of the legal fees she will be required to pay, and the process of you taking her to small claims court to collect all money owed, she can just move out within 7 days.


  8. Yes, it does lessen the financial damage on the property and owner, but what is really messed up about this, is you continue to reward problem tenants who then expect a handout, pay off, etc., and it contributes to the problem of “professional tenant.”

    • It\’s a big world out there. There will ALWAYS be those who, by their actions/lack-of-actions, are bad tenants. NOTHING that landlords do will, or can, change people\’s deprived nature. So the \”passing the buck\” concern is a bit unfair. What CAN be done is better screening, initially, by the landlord. A potential problem tenant usually has indications of such, and if proper screening is conducted, it will be the deterent from renting to bad renters (much better than \”passing the buck\”!). However, it\’s not a perfect world, and crap happens. But statistically speaking, better screening is the initial answer. It\’s my OWN fault that I recently (this week, if fact) have gone through a \”cash for keys\” ordeal (my first). I knew, when I rented to them, that regardless of the 5 months cash up-front (plus 1 month deposit), that they were questionable. I gave them the benefit of the not-so-qualified applicant doubt. My mistake. But the deposit covered the last month of unpaid rent, then 1 week and $300 cash-for-keys later, and they\’re gone. I watched them pull away. I again have a basically clean, empty apartment, keys in my hand (immediately changed all the locks!!), which I can now re-rent to a FULLY QUALIFIED applicant. No more mister nice guy …in the feeling sorry for them sense.. I\’ll still be a nice guy 🙂 And with GOOD renters! Lesson learned, and fairly unscathed. Whew!!!

  9. Alyssa Young

    I don’t know if this helps but I always make sure that I (as the landlord) have a spare set of keys to all my rentals so that I can access them whenever I need to, with proper legal notification, of course. Some tenants have changed the locks but have always given me a set when I ask. Always check all references. I have had some that had their relatives act like their prior landlord on the phone. I use It’s a huge help and the prospective tenant pays them directly for the report – so background checks at no cost to you. I’ve had a few bad eggs – very sad when children are involved. And have paid one family to leave. It was worth it!

  10. Hi I’m having a similar problem only it’s a rent to own deal but the person is still renting. I’m selling the property to them but its a rent to own setup. No written agreement but it was verbal with a friend as a witness. Tenant agreed to pay more starting February but she never came up with the money and now she’s being beligerant and threatening to sue me for asking her to pay more (and that was the agreement that she made with me that she would pay more after she finished paying off a debt she had). And by the way, she finished paying the debt in January. How do I get rid of her? As I understand I can kick her out for not following the agreement.

    Tenant is known for lying and cheating and can’t be trusted (something I learned too late): she broke an agreement and I want her out of the property.

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