Cash for Keys: The Controversial Process That Could Save You Major Eviction Headaches

by | BiggerPockets.com

Cash for Keys is a controversial process debated often in landlord circles, but something we LOVE and use. Cash for Keys is the strategy of giving your tenants money to leave the property, avoiding the eviction process altogether. We have used this technique several times over the past few years and found great success. However, before throwing money at your tenant, let’s talk about the specifics.

The theory behind Cash for Keys is simple: Giving the tenant money to leave is cheaper than paying an attorney for an eviction. Think about it: Evicting a tenant will likely take a month or longer, depending on your state. It could cost you several thousand dollars in legal fees to do so, on top of the lost rent for at least a month, maybe two, three or more. Then, you have to deal with the clean-up of a tenant who was just evicted, which is never very pretty. All in all, a normal eviction could cost you around $5,000 or more. But what if you could just offer your tenant $500 to leave the property in good condition? Exactly. That’s Cash for Keys.

Related: Landlords: Forget Being “Nice.” THIS is the Key to a Good Tenant Relationship.

Download Your FREE guide to evicting a tenant!

We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.

Click Here For Your Free Tenant Eviction Guide

7 Principles to Follow When Using Cash for Keys

Of course, $500 is just an example. Maybe you want to give more. Maybe less. It will depend on the unit, the tenant, and the motivation. However, $500 is usually enough to encourage someone to leave, especially someone desperate enough to be facing an eviction. If you are going to try Cash for Keys, the following seven principles should be followed:

  1. Explain to the tenant in detail what they need to do. We tell them that the unit must be in move-in ready condition when they leave, so they have to clean it and repair any damages. is saves us clean-up costs and reduces the chance that the tenant will damage the property on the way out.
  2. Give the tenant a specific date they need to move out by. Typically, we will not give any more than four days to move. The point of Cash for Keys is to get them out of the property quickly.
  3. Give a Pay or Vacate Notice anyway. We’ll talk about this form in a moment, but just in case they don’t leave, you will not have lost much time. This is typically the first step in the eviction process, and you should get it started in the event that the tenant does not leave.
  4. Meet with the tenant. Next, meet the tenant at the property and verify that the unit is, indeed, “broom clean.” To be safe, make sure to take someone with you.
  5. Inspect the property. Make sure the tenant lived up to their end of the bargain. e home should be cleaned out and in good shape. If not, show the tenant what needs to be done, and tell them you’ll come back in several hours to try again. Never give the tenant money until they are 100 percent out and have turned over the key.
  6. Sign the paperwork. Have them sign a simple document that relinquishes their tenancy at the property. is will protect you in case they later say you changed the locks on them or that they did not really move out. Make sure they sign and date the document.
  7. Hand over the cash. If the tenant has held up his or her part of the deal, hand over the money and thank them for a positive transition. Wish them well on their way! en get into the house and change the locks immediately.

Related: How to Get the Best Possible Tenants into Your Rental Property

Is Cash for Keys for You?

Yes, Cash for Keys stings your pride. It feels so “un-American,” like the bad guy is getting away with the crime. Some landlords flat-out refuse to even consider this idea because it feels so wrong, but remember, Cash for Keys isn’t personal; it’s business! Brad Pitt sums it up well in a phone call to Andy Garcia in one of our favorite movies Ocean’s 11, when he is stealing a large sum of cash from Andy Garcia’s casino:

“Are you watching your monitors? Okay, keep watching. In this town, your luck can change just that quickly. Take a closer look at your monitor. As your manager’s probably reporting to you now, you have a little over $160 million in your vault tonight. You may notice we’re only packing up about half that. The other half we’re leaving in your vault, booby-trapped, as a hostage. You let our $80 million go, and you get to keep yours. That’s the deal. You try to stop us, and we’ll blow both. Mr. Benedict, you could lose $80 million tonight secretly or you could lose $160 million publicly. It’s your decision.”

Mr. and Ms. Landlord: You could lose $500 this month secretly, or you could lose $5,000 this year publicly. It’s your decision.

That said, Cash for Keys doesn’t always work. Some tenants will refuse it. Some tenants will ignore it. Sometimes you just won’t want to try it. In that case, you’ll need to continue the eviction process.

[This article is an excerpt from Brandon Turner’s The Book on Rental Properties. To read the full book, click here.]

Landlords: Have you ever used Cash for Keys? Why or why not?

Let me know your experiences with a comment!

About Author

Brandon Turner

Brandon Turner (G+ | Twitter) spends a lot of time on BiggerPockets.com. Like... seriously... a lot. Oh, and he is also an active real estate investor, entrepreneur, traveler, third-person speaker, husband, and author of "The Book on Investing in Real Estate with No (and Low) Money Down", and "The Book on Rental Property Investing" which you should probably read if you want to do more deals.

22 Comments

  1. Kim Banks

    Cash for keys is great, but even better is getting excellent tenants in the first place. I look for high credit scores and verifiable monthly income equal to or greater than three times the monthly rent. I screen my tenants and collect rent through Cozy.co, and love it!

  2. super true! I use this as pre eviction option…..usually half the months rent…..Kim mentions get good tenants in the first place…..we do…but divorces happen, loss of jobs happen, inlaws come visit then stay, addictions to either alcohol or drugs or both develop……lots can change a tenant into an undesirable……cash works…..my buddy is a convert, he refused to offer his guy anything to move and we counted 61 holes punched in the sheetrock after the midnight move out……oh my goodness he now offers money based on how clean they leave the place!

    • Brandon Turner

      I agree. Although many tenants are stupid, and that’s why they are in that position (drugs, etc) I still feel bad, and hate kicking people when they are down. The Cash 4 Keys allows me to try to give them a helping hand instead of a kick. Too bad they don’t always see it that way. (Though – I’m usually “thanked” for it by the tenant! They know they screwed up, and usually are grateful.)

    • Brandon Turner

      Yah, one time I had my attorney handle the whole thing, and it worked well (he did it for free, because I give him a fair amount of business.) I’ve also had my in-house manager offer it, so it’s just “her job” and not personal to her. It makes the tenant more calm about the whole thing when they never meet the actual “bad guy.” 🙂

  3. Katie Rogers

    You write, “They have to clean it and repair any damages.” and “we will not give any more than four days to move.” Those two expectations are mutually incomparable. It might take several days for them to get someone to come and do the repair. And if they have a job? When exactly do they pack?

  4. Dan White

    Cash for keys is another tool in the landlord tool box, this is not for every situation. Under the proper circumstances this is a pragmatic way to deal with a problem. Most eviction situations I have had the tenant has nowhere to go and the place is in deteriorated condition such that they cannot come close to bringing it back. They tend to stay put until the Sheriff is posting his final notice then the reality of the situation sets in, they basically are in denial until this point.
    I used this effectively with drug addicted squatters that were in a home I purchased at auction, they moved in a hurry for $200.

  5. Maggie Tasseron

    Aside from the fact that I just don’t want to reward bad behavior, my main objection to cash for keys is that it encourages crappy tenants to pull it on subsequent landlords. It’s similar to insurance companies settling lawsuits by giving these same crappy tenants money even when there is ample evidence to prove their claims are bogus. Even if it does cost me some more money and/or time, I’d still rather evict them so that they wind up with the eviction and judgment on both their court records and their credit reports. When issuing an eviction notice I always warn tenants that this will happen and will follow them for at least 7 years; they don’t care at the time, but eventually they will find out the hard way when no one wants to rent to them. I would have appreciated the same heads-up from other ex-landlords but far too few people make the effort to get judgments after evicting tenants, and these loser tenants seem to make it into a cottage industry where too many good landlords down the line get burned once again.

    • Mindy Jensen

      Maggie, I totally hear what you are saying.

      I really hate the concept of “rewarding” a bad tenant for his bad behavior. I really hate it.

      Of course, the best defense is a good offense, and screening your tenants can help you avoid this situation. But circumstances change, and sometimes even someone you screened well on hard times.

      I like to look at this as the opposite of “Cutting off your nose to spite your face.” Yes, it’s going to cost you money to get them out. But how much do you want to spend to be right on principle?

      I would absolutely give terrible references to anyone who ever called me as a their past landlord. I don’t believe in sugar-coating or outright lying to get them out of my property. But the cash for keys? I’ve come around to this concept, reluctantly, but I’ve come around.

      • Katie Rogers

        “But circumstances change, and sometimes even someone you screened well (fell) on hard times.” This sounds like the tenant is still a good person but maybe something happened. Maybe they had an accident, or got laid off. I understand cash for key as a means to get rid of a bad tenant. But to take one problem, and be the cause of it snowballing into more problems for a good tenant seems wrong to me.

        I once fell on a bit of temporary hard times. I told my landlord what was going on, and (this is key) my proposal for making sure my landlord did not lose. I was very thankful my landlord did not put me and my kids on the street in only four days. In a few months, I had made it all up to the landlord. I will always treasure the letter of recommendation that landlord gave me when I moved to a new community after a 4-year tenancy with her.

      • Maggie Tasseron

        Hey Mindy: I’m sure your efforts are appreciated by landlords who you’ve helped to dodge the bullet; I know I appreciate it…

        Of course screening is key and I’m also aware that circumstances can change; it’s what tenants do — or more likely fail to do — in these circumstances that can make all the difference between keeping me as an ally or turning me into an enemy. I once had tenants for over 5 years who were absolutely the best. Then I decided to sell the property and gave them first refusal, as they had asked at the beginning, I gave them 3 1/2 months to see about getting a loan, and when I asked for a progress report about 3 months in, it became clear to me that it was not going to happen. At that point, they started lying to me, blocking every move I tried to make to have them move out, and even refused to keep the rent current. They cost me a lot of money and completely messed up my plans in the process. Of all my tenants over the past 40-odd years, they were the best but wound up pretty much the worst in the end. Go figure….

  6. Matt Sicignano

    Yea, thats a great idea-and what about screwing the other landlords down the road? Isn’t past behavior a good predictor of future behavior? Doesn’t Biggerpockets have a credit checking service? What good does that do the next unfortunate (landlord) victim after he pays for the credit check and it comes out clean? Doesn’t Biggerpockets preach doing credit checks? And doesn’t this extortion play circumvent that? What hypocrisy!

    • Rick VanRyckeghm

      Matt,

      No hypocrisy in this article. BP preaches good background checks…including calling past landlords. If you only use a credit check as your screening then you will get some bad tenants.

      I chose not to be a victim…so I use common sense and research to prevent it.

  7. margaret smith on

    Hi Brandon-
    Does this work for mortgage holders too?
    This wonderful blog comes at a great time for me, as I lend to investors, and I have a serious deadbeat on my hands. I have just won the right to foreclose on a terrible deadbeat after 2 and 1/2 years (!) in the court system. My investor/borrower did everything in his power to prevent me from getting a judgement, collecting rent and not paying his mortgage for 7 years! He doesn’t file income tax either- so you can imagine his reluctance to let go of all that free monthly income! He managed to get an attorney to defend his weak case on a contingency basis, and has now finally lost the battle… but has moved his whole family back into the empty place and will no doubt squat until the Sheriff shows up, perhaps months away.

    I would assume this Cash for Keys would work on a foreclosure too, but perhaps with a modification or two? For instance, should I go for a fully executed Quit Claim deed? Will this prevent me from having to go through the foreclosure procedure? Will it affect what I might owe other investors (pre-existing liens) or is it just safer to complete the foreclosure? Would a QC affect my standing to file for reimbursement of legal costs (substantial), meaning that this scammer who now shows on record as owing the amount of the judgement (principal and accrued interest), will not show as also owing my legal bills? You can’t get blood from a stone, so zero funds are actually collectible via the court system, I just get the house. What condition will it be in? I’m afraid I know the answer, the property is visibly deteriorating already, and I dread going in to the house without some kind of agreement between the parties to leave it intact. He may set fire to it before he goes!

  8. Russ Cherry

    I once had a tenant who was a car salesman who seemed normal at first. After months with no problems I went in to repair a ceiling fan and he had dozens of porn mags displayed on his coffee table like they were southern living. Weeks later he confided in me that he was really a 400 year old vampire related to George Washington. I had 3 single women living in the quad as well and the porn thing really bothered me. Later he showed me his assault 12 Guage and how somebody must have messed with it while he was sleeping. Paranoia! I did some checking right away and found he’d lost his job weeks ago and was slowly going crazy. People do change over time. He later came to me and asked if it was ok to break his lease, that he wanted to move. That was answered prayer, I helped him pack! Porn often makes people behave like animals and I was really concerned about the ladies living around him. You never fail to find the serial rapist who’s not first addicted to porn.

Leave A Reply

Pair a profile with your post!

Create a Free Account

Or,


Log In Here