How Did You Negotiate Cash For Keys?

Question

Has anyone done this? It's looking like I will need to, with a tenant lease expiring 30 days after the 60 day FHA move-in period. What do you typically offer to get them to leave? How did you ensure they would leave before you bought the property?

Scott M. · Answer

In today's world filled with COVID eviction bans I would never ever never purchase a home with a tenant in it if I needed the home to be vacant.  Hoping you will get the tenant out is a luxury that disappeared in March of 2020.  At most, I would require the seller to deliver it vacant as part of the sale.  Once it is vacant, you can close.  Even then, you are putting all of your trust in 2 people that you likely don't know.  That the seller will and can and that the tenant will and can.  All it takes is for one of those two parties to won't and can't and you have an issue on your hand.  Doesn't mean you will, doesn't mean you won't.  Just understand the risks.

As far as cash for keys goes, you simple make an offer.  Hey, would like you to be out of the home by X date, have the home be broom clean and in exchange we will give you X dollars.  The more you tell them how desperate you are, the higher the fee they will likely demand.  This is why it works well as an option to eviction.  Hey, we are going to spend X on lawyers and bailiff's, how about we give that to you instead.  You are not desperate in this situation.  You are going to pay someone.  They will be out of the house.  Just a matter of them leaving with money or leaving with all their stuff in a dumpster.

As Joe said, this isn't your deal to make as you don't own the property though.  This is something the seller needs to handle.  But if you have a chance, make sure your PA says the home will be vacant (or the unit) prior to close or his issue will become yours when you buy it.  Save yourself the headache, or at least, be prepared for it.

Joe Splitrock · Answer

You can't get an FHA loan if the lease is past the 60 day mark. You will need to have the current owner negotiate a new lease that has the tenant leaving in less than 60 days. The first step is just asking them if they are willing to leave one month early, but the owner needs to do that. You can't contact the tenant until you have ownership of the property.

Joey Gorombey · Answer

@Joe Splitrock Thanks, Joe! I will proceed by asking the current owner!