What is a “cash for keys” agreement and should I ever pay a tenant to leave? Plus FREE paperwork.

by | Indy Anna, Real Estate Investing

What is a “cash for keys” agreement and should I ever pay a tenant to leave? Plus FREE paperwork.

First of all, THANK YOU again for making this channel the number one channel for Indiana real estate on YouTube according google analytics and SocialBlade info for BigReia.com.

This is a quick video I made to answer the questions I got about doing a “Cash for Keys” agreement…

What does “Cash for Keys” agreement mean for Indy landlords?
Free contracts and paperwork.

Indy Anna Explains…
What is a “Cash for Keys” Agreement and should landlords do it?
Should you ever PAY a tenant to leave and if so how can you do it correctly, what if I’m the tenant/homeowner?
How much money does it cost/make to do this and how can you make an extra $3,000 – $5,000 money helping landlords do this?

Let’s say you are a landlord and you have a bad tenant.
– First you should go check out our Epic BigReia.com post on “14 Ways to Screen Bad Tenants” the link and video is in the description and if you follow the steps then bad tenants should be a thing of the past.
– So with a bad tenant it MAY make sense to just pay them money for them to walk away. Ideally you give them cash and they give you the keys to a rent-ready house. Keep in mind that it will almost never work like that.
– This can be cheaper, easier and smarter to do then to go through the full eviction and repair process.

Here is the five step “Cash for Keys” process that I use for myself and clients once we have a problem tenant:

1.) First establish the cost of an eviction and repairs.
– You want to get inside the property if possible and know exactly what your rough costs will be.
– Know these costs and it will help you determine your “cash” offer, maybe you offer half your projected costs for example.
– You can also use the BigReia.com repair estimator as well, link in the description.

2.) Talk to the tenant.
– As usual your DIALOG is super important so you want to try and talk through the issue and see if you can salvage the situation.
– If they refuse to pay or cooperate then explain that an eviction on their record can make it much harder or impossible to rent somewhere else.
– Find out their plan and help them develop a better one.

3.) Come up with a plan WITH them.
– Now you can suggest a “cash for keys” scenario where you will pay them to leave the property in good condition.
– This has worked best when I help them with their next move so make sure you help get into an apartment, move in with family/friends, help them get a (better) job, etc.
– Like it or not they have leverage so being nice and extending Goodwill can go very far.

4.) Sign the “Cash for Keys” agreement.
– Maybe the “cash” is money, maybe it is giving them a month free, maybe it is helpuing them move, maybe it is returning their security deposit, etc.
– Document the exact “cash” and the “Move Out” date for the tenant.
– Also put the specific conditions that the tenant must meet as far as the property and the rent-ready status. You want to push them to leave the property as clean as possible.

5.) Move out and confirm details.
– Make sure the terms of your agreement are met and the property is in fact in the agreed upon condition.
– Also help the tenant as you agreed in getting them to their new living place.
– Once everything is finalized you can give them the check (not actual cash) so there is a record. Also make sure the security deposit is specifically mentioned and forfeited by the tenant.
– Make sure the post-move agreement is signed that confirms the “Cash for Keys” agreement has been honored and the case is totally closed. Go to BigReia.com and you can download free Examples of these agreements at the links below.
– Once everything is closed and proofed you want to start showing the property that day, if not sooner.

What if you are a homeowner and want to do this with the bank?
– If foreclosure is unavoidable your bank may pay you “Cash for Keys” but there will be requirements.
– This is basically a Deed-in-Lieu of foreclosure and you may need to at least attempt a short sale during the process.
– The HAFA (Home Affordable Foreclosure Alternatives) program expired in 2017 but in that program they paid the homeowners as much as $2,000 – $3,000 for “Cash for Keys”
– You may get more or less but you must talk to the bank and explain the situation and make your situation clear as well as their costs.
– This will not be as bad on your record but it will still leave a mark, only do this as a last alternative and in the meantime do the L/A Model as you try for a short sale.

I never thought I would do this much, but as we sharpened our process a lot of investors and property managers asked us for help to get rid of their bad tenants.

I don’t have anybody making big money but you can make a side income of $3,000 – $5,000 helping investors and landlords get rid of terrible tenants.
– It all starts with your DIALOG and how you talk to the investor to begin with because they need to be realistic about the real, actual costs of an eviction. Otherwise they will think that paying a “dead beat” $1,500 is crazy.
– The next thing to know is that THE MOST IMPORTANT step is the way you talk to the tenant, you must nurture and “Love on Dem” as we say. The reason our success rate is so high is because we actually try to understand their situation and help them get other housing, income, jobs, and so on. Nobody does this for them and for the most part it works well, there are some real dead beats and LCs but not many.
– If you don’t like people this is not for you. You will hate this and think people are just dumping their negativity on you OR you can look at this as a chance to help people turn their lives around when they are at rock bottom. It is all about perspective.

How you can make money doing this:
– You can get paid a flat “Consulting Fee” ($300 – $500) and help the landlord/investor do this.
– You can get paid a flat fee of usually $500 – $1,000.
– The landlord can just name a total price like $2,500 that they will pay for everything, the “Cash for Keys”, your fee and so on. Then when you talk to the tenant and establish a price you’ll know exactly how much you’ll make. So if they are okay with $1,000, you’ll make $1,500.
– You can get paid in equity or a percentage of the income with the next tenant.
– You can also get paid a retainer by a management company or something to do this or consult them through this, I get $1,700 from one of the largest managements in the Midwest and I do conference calls to walk them through process.
– You can get paid on the sale or with the down payment on a lease option tenant right after this one is out. If you do this you want to market immediately so you know what kind of tenant buyers and down payments you can expect.
– You can do this as a GXM or a combination of any of the above

Remember to go to BigReia.com for the paperwork and “Cash for Keys” paperwork and for the most amaze balls social mobility training on the planet…

… we are building the largest group of special business owners and changing lives around the world so join the movement.

Thanks so much!

Remember the big secret here today is that you really want to try your best to help the tenants with their next move. Get to know them and take care of them.

Free paperwork and contracts:

Here is a basic Cash for Keys Agreement.

Here is another version that is a one page Cash for Keys Agreement.

Here is an addendum so you can add any details to the Cash for Keys Agreement.

Here is a Lease Termination Agreement that you want to have signed so you don’t sued later.

The ACH authorization and/or credit card authorization form (VERY important):
You can download it HERE.

Here is a standard tenant application form:
You can download it HERE.

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Thanks so much!  = )

Make the Universe Smile.

~ Indy Anna
Love (at) BigReia.com
(YES that's my actual Direct Line and I really do answer lol, so please text me first Thx!)

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