Evict or cash for keys?

17 Replies

Hey all, My wife and I just bought our first small multi family (fourplex) that we intend to owner occupy. After closing we sent one of the units a termination of their month to month lease because we have to move into it. The tenant has been there for quite a few years and has broken so many aspects of their lease I lost count. They have: - kept a ferret without a deposit or approval - just put a hole in the wall - painted all the bedrooms ridiculous colors - Havent oaid their trash bill in over 3 years - replaced all the ceiling fans and did the electrical themselves (without a license) And multiple other things. He said he would move out by the first of next month but demanded I give him his security deposit back, in full, right now. And has been very confrontational and demanding. I’m not giving it back until after move out, but he is retaliating by submitting a heap of new “maintenance requests” that seem to just now come up. I’m worried he’s going to keep destroying the unit, should I just wait out the two weeks or try to evict? Thank you

@Grayson Gist unfortunately I have been here before. I offered cash for keys and all my dead beat tenant did and say, hey I need that cash to live in your place longer than my 60 day no cause.  That tenant had trashed the place, but truth is, I inheritated them when I purchased the property. I also gambled on very bad section 8 and lost thousands. Take it from me, if you can cut your loses further by paying cash for keys I wpuld do it. I would stipulate that they are FULLY moved out and also cleaned up properly before you hand the cash over. Just my thoughts. Lose the battle and win the war! 

I'm a man of principal. If it ever came down to choosing eviction or cash-for-keys I would evict so other property owners will know to avoid the clown. 

@Karl B. @Todd Powell Both of those views are what I’m torn between. I talked to a lawyer in the area and he said it’ll be easier and cheaper just to incentive him to move out, but on principle he is extremely rude and arrogant. I guess you have to pick your battles.

I would serve proper notice to enter and accurately record the state the unit was in at the time I purchased the property and the state it's in now. I would let the tenant know what needs to be done and what choices he has. Everything's negotiable.

I wouldn't bother with cash for keys with someone of this nature and temperament. I would take the case straight to my eviction attorney. In my jurisdiction he would be out in less than 30 days. Evictions (for cause or for no cause) are are swift in my location. The attorney's fee would be worth it. And it would be appear on his legal record.

@Grayson Gist   What would be best for you would depend on the laws of your jurisdiction. Look at all possible scenarios. Whatever your move, it will likely draw a counter-move, so be prepared.

@Grayson Gist I am to a man of principle and integrity. The issue at hand is I have paid thousands to an attorney, had to leave work twice and be at court, not to mention that they still bought 30 days of extra free rent to do this. 99% percent of the time the people I screen are wonderful. But more than 50% of the time the tenants I inherit from buying a run down building that I need to rehab and turnaround, it is easier to work peacefully to get them out. You can get more bees with honey than with vinegar. My 1% of horrible tenants have made me want to sell 100% of all my properties. Best of luck on this one !

The deposit is really inconsequential, especially since there's already plenty of damage and repainting to perform. That said, I wouldn't just hand it over- hopefully the existing lease has verbiage regarding how and when the deposit should be returned? If not, follow state law, your attorney general should have guidelines in a simple document for how to do this. 

That said, I agree with @Todd Powell - you catch more flies with honey. Do you have any idea how much an eviction might cost you? It can vary greatly depending on your state laws and how you handle it. I'd ask around, go to a REIA, ask some property managers in your area, etc. What ever the average seems to be, find a number below that which would allow this tenant to get in to a new place. You'll probably end up negotiating, so make sure you have some room to come up a bit. Get it in writing as an addendum to your current lease.

Just a suggestion, I've had some luck using the approach; "obviously you don't like dealing with me, let's come up with a solution that works for both of us so that we can move on with our lives and not have to speak with one another ever again."

Good luck!

Cash for keys is a quitter mentality but it's a free country. You're essentially rewarding the bad behavior to escape a greater loss and then dumping them on the next unsuspecting Landlord. But it's a free country.

I would hire an attorney to evict them properly and then seek a judgment for the damages. I would go after them for every penny. I may never see a dime but at least it sits on their credit and possibly stops them from damaging someone else in the future or keeps them from qualifying for a car loan, home loan, etc.

I hope you've learned the following:

1. Always inspect every nook and cranny of a purchase, to include tenant payment history, strength of the lease, any lease violations, etc. In this case, you are aware the tenant broke the lease too many times to count yet you still bought the property and inherited them.

2. When you identify a problem tenant or a problem unit, negotiate the contract to get rid of them and/or clean the place up BEFORE you become the owner. The previous Landlord created the problem, you accepted it, and now it's going to cost you thousands to clean it up.

I hope you got this property for a good price.

And under no circumstances should you return the deposit or hand them any cash prior to vacancy. I also recommend you cut off all communication and start the eviction process. In most cases, tenants will disappear when they receive the Pay or Quit Notice and realize you're not going to play games. The more you talk with them, the more they will try to intimidate or manipulate.

@Grayson Gist ,

When it comes to security deposits, the burden of proof is on the landlord to show what the property was like when they moved in, and damage is past normal wear and tear. If you got new ceiling fans- that's awesome, have someone check them-- but that's an improvement! Legally, what does your state law say you have to give them to terminate a lease? In VA it's 30-days, I'd assume yours is similar. Do you have proof of what it looked like when the tenant moved in, such as a checklist from the prior landlord? If not, they will say that's how they got it and IMO it's just a giant hassle that's not worth it. You can evict, but it will take longer, $$$$$ than just getting him out ASAP. If you can't prove it with evidence, the judge isn't going to just award you his money because it's an not in pristine condition.

He wants his security deposit back so he can pay it to the next landlord to get a place to move, if it's low income, you gotta realize most don't have savings and he wasn't planning on moving when you bought it.     

I'd go up to them, and simply state we can do this the hard way-- and you will play by  regular rules, and the eviction will essentially make it insanely hard for him to find a place, or he can do the easy route.   I'd offer him an incentive to move out faster.  Write up the lease termination ASAP.     I'd give him the legal notice, and return his deposit (yes, it will be painful, but if you don't have proof, IMO it's a lost cause, not worth the hassle/stress) , and offer him a sliding scale, $400 if he moves out next week, $300 if he moves out in 2 weeks, $200 if 3 weeks, contingent that he cleans up the place too.  

Weigh the amount of stress/time/money that each option will be, and what will get you the results you want the quickest/easiest.     Don't get emotionally involved, just rip the band-aid off and get him out ASAP. Evictions are a huge PITA-- we had to do one earlier this year, and it took 3 months, tons of stress, that's  over $2,500 in lost rent-- also, they left over 10 tons of garbage-- could be worse!

Ps. Sherwin Williams has an amazing primer, the walls won't be an issue at all!

I would potentially do a "hybrid" approach.  Offer them their full security deposit back, on the day of move-out and after the keys have been turned over to you.  Subtracting only damage that has occurred since you bought the property.  If they know all the prior damage is forgiven, hopefully that will keep them from causing more.  Though people like that tend to be impulsive and can't plan 5 minutes into the future, much less 2 weeks, and could cause more destruction no matter what you say or do.

Thanks everyone! @Linda S. I never thought about a scaled approach, I like that. @Nathan G. We did know he had made alterations to the unit before we closed. But we made about $14000 wholesaling the next door fourplex and we got this one under market (it appraised for $40,000 more than we bought it) But it’s still frustrating that he is throwing a fit and putting holes in the walls. @Corby Goade I am leaning towards the approach that avoids evicting, he seems to be getting ready to move. He said he found a new place, hopefully he’s not stringing me along

@Grayson Gist Congratulations! Just be prepared to start the eviction process if he's not out as agreed. It's not unusual for tenants to keep asking for a few more days or another week.

@Nathan G. I agree with everything you stated above. I am a nice guy, and sometimes a bad tenant just smells that out and doesn't make a move. I also agree that when I have bought off market, run down buildings I take on that risk based on the prior landlord. This is where most of my issues have come from. I have at times made the closing date 70-80 days out and asked the current owner to served their tenant a 60 day no cause and for them to be completely out by the time I close. This has worked, but not always. I would much rather have a vacant run down unit to rehab, than a horrible tenant who is playing games and still have to clean up their mess after move out. In principle, you are correct also about doing eviction and all steps necessary, but I have a full time job and manage 22 doors, and its easier for me to find peace and save money in the process. But, I don't give them the black eye that they deserve many times, and recently another landlord took a major problem away from me. They made a huge mistake!

Sounds like the place already needs to be remodel. Save your cash for this or the eviction process.  Get the eviction on his record.  Then you can continue to the last laugh for years on him over your short term remodeling time.   Don't start being the nice guy or the push over.  If you do, get ready to be walked all over and lose money.

I personally would never bribe a tenant to leave, especially a bad one. If however you are going to become one of those landlords I would file for eviction immediately before you offer a bribe to give yourself some leverage. Probably will have to return all his deposit as well as part of the bribe.

File the eviction then ask how much he wants, don't make a offer until you hear his price. Offer him 10 cents on the dollar to start.

@Grayson Gist Cash for Kay's works and keeps them from destroying the property because they don't get their cash until all of their stuff is moved out and you inspect and confirm there are no damages. If there are damages when you inspect they get charged for all of them. Statistically an eviction process takes one to two months in Georgia but there are ways a tenant can stall and a malicious tenant may cause more damage. I would go with the cash for keys deal and let him know he doesn't get it until you meet him everything is cleaned out there's no damage.
@Grayson Gist Start eviction immediately. Run it like a business. Everyone wants to be friends and play nice and less headache. I say screw that, evict them. More then likely the 3 day pay or quit if they are behind or a 7 day notice should get them out. But like someone else said no more communication except “get out now” here’s some legal paperwork. Good luck