If the PTFA law makes landlords honor existing leases, or at least provide 90 day notice to move:
How effective are cash for keys offers to expedite eviction? Do tenants typically feel uncomfortable enough or motivated to move out (with or without a cash for keys offer) or do they usually exercise their rights to stay 90 days or the remainder of their lease?
What is a typical effective Cash for Keys offer? Is it 2K, 5K 10K and for typically for 15 or 30 days?
should investors avoid bidding on a property without knowing if there is a tenant, the lease status and the intention of the lessee?
What is the most efficient way to determine if a property has a tenant?? Is just checking to see that the owner has a different mailing address on ForeclosureRadar, enough?
Very effective if you have good people skills and the folks aren’t completely whacked.
Expect to pay 1-2 months rent. Most folks need 1st and deposit to move. Start at half that.
Some investors do avoid them. That may mean you can get a better deal, so its a tradeoff. The key is to know.
While a different address is a good clue, it isn’t enough. Lots of “investors” bought as owner-occupants to get better rates, and as such used the property address as their personal address. Only sure way I know is to ask. Either the occupant, or sometimes a neighbor. Tools like Accurint or Merlin Data can also help if you want to spend the time and money really digging into who might live there.
Great, thanks, good information! If I can coax you to be a tad more specific to #1, would you guess cash for keys offers are effective 95% of the time (only get stuck 5%)? I know there are tenant rights websites detailing and encouraging tenants to fight for their rights. How many times have you tried this, just to get a good understanding of your “sampling.”
I’ve purchased more than 150 foreclosures, and I’m sure at least 100 had an occupant. No idea how many were renters vs. owners, but plenty of each. The web has certainly made everyone an “expert” - but cash for keys isn’t about tricking people out of their rights, so I don’t know that it matters much. I won’t give you a % because as I indicated above it really depends on the negotiation skills of the person handling it. I’ve had folks working for me with a zero success rate, and others 100% successful. Impossible to say how you will do.
No hard and fast rules. You need to assess the reality. If the folks have two pieces of furniture and look like they could really use some cash, you might want to start with offering $500 if they are out tomorrow. If you have a family that’s been in the house for 10 years, with every nook and cranny full to the brim, your going to need to expect it to take longer. I think the most important thing to understand about the foreclosure business is that there is no formula. Nothing always works. Common sense and flexibility are the key.
Another successful strategy that I have seen used frequently is to offer a certain sum, say for example $2,000, if the house is vacated in one month. Then further agree to pay an additional $500 for every week the house is vacated sooner than that. The occupant then has incentive to move out sooner.
Also, you may want to have the occupant sign a written “Relocation Assistance Agreement” (a.k.a. cash for keys agreement) which includes a provision that the house will be turned over in good condition, broom swept clean and with all appliances and fixtures in place. While actual enforcement of the written agreement may become a procedural challenge, it will make expectations and obligations clear .
So of your 100 or so purchases with occupants, did you offer Cash for Keys, and in your own personal experience, (I’m assuming you have good people skills) were you successful say 95% of the time? 2) Owner occupants have three days to quit, right (at least here in California)? So I assume cash4keys is not as important, as you have legal leverage to force a quick exit, though I’m sure some occupants want to continue living rent free. So are Cash for Keys offers necessary or helpful when dealing with the prior owner/occupant?
Can’t recall. I personally wasn’t great, primarily used others who were better than I at it. 2) 3 days to quit, only means 3 days before you can file the unlawful detainer. Entire process is 45-90 days. cash-4-keys is almost always the right way to go.
We have purchased 9 homes at the auction in the past 13 months. 3 had tenants. It is my opinion, that the tenants are real victims in the foreclosure mess. They have been lied to by their deadbeat landlords who all continued to collect rent and not pay the mortgage, taxes or HOA fees. But we need them to leave and the sooner the better. I am not there to be their legal counsel. But we do treat them with respect and fairly. In the real world, the tenants know they have to leave and the offer of cash for keys has worked to their advantage everytime (for us). As Sean says, it is a negotiation. They don’t need the law if they get what they need. As Mic said, “you can’t always get what you want, but if try, sometimes, you get what you need”. Be fair and respectful to these poor soles who are the victims. They will be grateful and happy.
Sean – You suggest using services like Accurint or Merlin Data to find out more on who is occupying a property. Do you mind being more specific on the exact Accurint and Merlin Data products you suggest for doing this (Both services offer a slew of products). It’d be nice to have an extra option as talking to neighbors and getting info from occupants isn’t always fruitful. BTW I find your online service suggestions helpful. In the past, you suggested I look into TitlePoint Express which is an amazing service.
I guess it was inevitable, but we have purchased an auction house with a difficult possession issue. It is difficult because the occupants have lied about just about everything. At first, they told us they rented the house and they and several other people were living there. So, we opened negotiations for cash for keys. They said they thought they could stay longer than we were offering. We told them that this was correct, but if they did not leave early they would not get any cash from us and would have to pay us rent. We gave them several days to think about and made a couple of more visits worth no results. It was obvious the woman was anxious and was stalling. The story and number of people living seemed to change with every conversation. Finally, we found out that the owners also lived there and that the rest of the people were relatives. The family is Mexican and they are sticking together. We found the owners at their place of business and met with them a couple of more times. The meetings were contentious at 1st, but we eventually sat down to try to understand what they needed and tell them what we wanted and see if there was middle ground. They claimed they were working on a loan mod and did not believe the foreclosure really happened. We showed them the Trustee?s Deed and they seemed to understand it. A couple of days later we met again, this time they told us they did not want our money, just more time to stay. Based on the series of lies and outright rejection of the cash for keys offers, we decided it was time to get the attorney working on a formal eviction. Although the owners lived there and we could have tried a 3 day eviction, he advised against it because of the fluid nature of the other occupants. It is clear that most of the people living there are relatives. When we asked for a rental agreement, they reported there was none. So, we are proceeding with a 90 day eviction. So here is an example of abuse of the tenant eviction regs. Unfortunately for the owners, we will get a judgment and it will get recorded. They have a small business and I am sure they need their credit. As I understand it, the judgment will be on their record for 10 years. So, yes, CFK is best for everyone. A basic requirement for a successful negotiation is enough honesty and willingness to allow the parties to understand the needs of the parties. Once it was clear they were not willing to negotiate in good faith, we really had no choice but to enforce our rights. As you can see, once these so called tenants exercise their assumed right to stay, we will exercise our right to have the Sherriff hall them out and add another mark to their credit.
Would you let the original owners of the foreclosed property, become renters of the house if they expressed a strong interest not to move and were willing to sign a lease with deposit etc? Or would you just kick them out to avoid problems in the long run?
If you are planning to rent it anyway, I don’t see any real downside. I’d probably only do it if they were taking care of the place, had stable income, and were reasonable to deal with, in addition to the lease and deposit you mentioned. If you plan to flip, better just to get it over with now.
yes…but $500 & a day to move for people who have little funiture…aka…dirt poor…does not sound fair. If it was me, I’d say heck no, stay w/ help from any free (since I’m dirt poor right) legal advice, pursue my right to deposit, sublet, possibly see what structures were for sale in the house (washer & dryer, staurcase, etc…get the picture) unless he wants to began at 2,000 & at least 30 days notice. Have a nice day…
As a renter, selling fixtures would be illegal… theft or at least “conversion”. We’ve actually called the police in one of these cases and had the folks arrested. You get what you pay for with “free legal advice”. Threats to commit illegal acts or abuse our court system are not the best bet for renters in this position. That said, they should know their rights (ability to stay till end of lease, etc.), and they should certainly negotiate the best cash for keys deals they can.
I’m not advising anyone to steal…but once the home is forclosed I think some things are up for grabs. If you had someone arrested…i doubt if it stuck ( unless it were clearly & painfully obvious…everyone knows most banks initiated cash for keys to prevent property damage from a disgruntled person) & it was probally less painful than 500 bucks (a room for rent or cot in CA) & move in a few days. I just saw a property for rent that was a beautiful house & apparently someone came back (best guess former occupant/owner) & tore out piping, damage refinished basement, I was just about to submit to live there & the poor Agent was in shock. They even did the nasty in toilets. No arrest yet only suspicion. Sounds like to me you just never encountered the ‘right’ sort of canidates yet…or you’re not mentioning it. I say treat people reasonably fair…(common sense) & less bite later.
p.s. Only an extremely ‘unwise’ person would not listen to free or reduced legal advice & instead take the word of someone who’s best interest is for them not to. lol…Legal Aide is non-profit & some of the best bona fide attorneys who are usually idealistic & this stuff (going after wealthy s special interest) is sort of the dream job for some…not to mention all the Pro-Bono attorneys they refer poor or working class tenants to.
In negotiations with a bank for a foreclosed single family home in Los Angeles that has a tenant. Tenant has supplied us with a “lease” signed with previous owner 2 months before home went back to bank. Lease is 3 years in length and for substantially below market value ($800 per month in neighborhood where rents are minimum $2,500+ per month) for home type and area. Everyone including broker who has listing for bank thinks the lease is forged. Is the “lease” valid or can they be evicted upon close of escrow. We will be owner/occupier. Cash for keys a good option? What are potential hazards? Also issue of now missing security deposit tenant paid at start of lease…
Any light that you can shed would be greatly appreciated.
Waiting in Hollywood…