Should I do cash for keys if I don't have to?


#1

I guess I’m having a fight between my business mind and my heart. On a property I recently acquired, although there’s not an official c4k agreement yet the previous owner doesn’t want an eviction on their record and is being responsive to allow an inspection of the property and working on finding a place so I feel I should do the cash for keys payout of $2000 and 2-3 weeks to move out which I mentioned to them is about the average. But part of me is thinking that if I just proceeded with the eviction they’ll move out before the case ends and I wouldn’t have to pay the $2k cash for keys and the case can then be dropped, and even if they stuck around until the sheriff kicks them out it would only be about a week longer than the cash for keys period anyway. I mean I’m not sure how profitable a deal it will be yet and I don’t have so much money to afford that $2k without hesitation. And they’ve been able to live rent/mortgage payment free for a while already. So what should I do? What would you do in this case?


#2

Before you make the final decision you should check the eviction timeline in CA. An uncontested eviction takes 34 to 41 days or more and a contested eviction can take 47 to 59 days or more.
If you know how to file the unlawful detainer and other paperwork you can do so for a nominal fee but in order to make sure the paperwork is properly completed you may want to hire an attorney and this will cost you at least a few hundred dollars.
This does not even take into consideration the damage they could do if you decide to pursue the eviction rather than work with them.
That said, if you have not negotiated a cash for keys deal then why do you feel obligated to offer an incentive if they are already willing to move? If you have talked about an incentive it does not have to be that much money. I have seen cash for keys deals that are a few hundred to several thousand dollars. If you have already offered $2000 and they are working with you based on that offer and you are planning to renege then you could be setting yourself up for a very hostile situation.


#3

It is worth $2K just to know the place won’t be trashed on their way out. Or worse. Over the decades I’ve had 3 places torched.


#4

I’ve heard that timeline you mentioned but there are also several eviction companies that quote an average of 21 days. The reason I feel obligated to offer an incentive is because I mentioned they have that option instead of eviction and I guess where I messed up is telling them what is average. They want c4k and not the eviction and it works in my favor too because I think that is what got them to communicate their situation with me (wanted to make sure they weren’t planning to try to rescind the sale or sue me along with their lender) and let me inspect the property. But now that I’m more familiar with the situation and the eviction process, it seems the better financial decision would be to give them less than average or worse case wait for the eviction. But even though there is not an official c4k agreement, I feel they deserve some money because they have been working with me and getting moving. They deserve some money more than other occupants who seem to get more in their c4k just for being hostile.


#5

The cash for keys option is a good investment if you feel they may damage the property or put up an extended fight via BK filings and additional tools to drag out the process. I’ve always tried to consider the other parties needs as well. If they are destitute and truly unable to care for their housing currently the cash is a nice contribution to keep a family off the street. However you always have to balance that interest while protecting your own family from the same end. Maybe a mutual negotiation on a smaller amount would benefit both parties. Good luck!


#6

It’s not a matter of you “messing up.” In the big picture, $2,000 is a pittance to pay to guarantee you continued access to the property and the people moving out without trashing it. There is also the matter of keeping your word, admittedly something a lot of people don’t care about anymore. Yes, you could get off cheaper, but if it were me (and I’ve done lots of REOs and CFKs), my integrity is worth more to me than trying to shave $500 from the deal.


#7

Thank you all for your input. Yes R Skinner, exactly, it is a balance. I’d like to be able to give them the $2k without hesitation if I had so much money or it was very clearly going to be a good deal. Hopefully I’ll choose a solution that we are both happy with.


#8

Hi Alan, They may tell you that it is an average of 21 days but if they answer the complaint and then use additional delaying tactics it can take considerably longer. I remember Sean O’Toole telling a story about how it took him almost a year to formally evict one tenant.


#9

Didn’t see your response before I sent mine Monique. I keep my word as well, I never guaranteed them/gave my word to $2k verbally or by written agreement, that false allegation actually shows a lack of integrity. I did say I would give cash for keys and I will keep my word, I’m just trying to decide what amount to go with based on various factors. I feel bad for anyone losing their house, but I dislike how this c4k system is set up where the bad previous owners/occupants get more money. It should be the occupants who are responsive and move out right away without any hassle who should get more money in the cash for keys agreement, but it doesn’t seems to work out that way.