Joe Homs, a real estate investor with 40 years experience, walks through a seven-step cash-for-keys process that lets landlords buy out tenants instead of evicting them. The approach speeds up vacancy, improves returns on flips, and gives you control over timing. You'll need a W-9 from the tenant and must issue a 1099 at year-end.
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In today's video, I'm going to talk about a technique that you can use to skip the eviction process altogether. Coming up next. Cash for keys is a controversial process often debated in landlord circles, but something that is loved and often used. Cash for keys is a strategy of giving tenants money to leave the property, avoiding the eviction process altogether. However, before throwing money at a renter, there are several points for a homeowner to consider. Welcome back, I'm Joe Homs. I have over 40 years of experience. I made this channel for the new and experienced investors just like you, those who want to create the life they've always wanted through real estate. There are a few steps that you need to follow to make sure that this process goes smoothly for all parties. Number 1, always explain to the tenant in detail what they need to do. Number 2, always give the tenant a specific date that they need to move out. Number 3, give a pay or vacate notice anyway. Number 4, meet with the tenant in person Number 5, inspect the property. Number 6, sign the paperwork. Number 7, hand over the cash. If you've done all those steps correctly, everything should go smoothly. So the process of making sure that the tenant is on the same page as you are, setting the expectations that this place is going to be left vacant And broom finished, so not a lot of trash left behind. Okay, he is going to get— he or she is going to get the money in cash once they fill out the contract that you're going to bring with you. Any property left behind according to the contract is considered trash and will be thrown away. That is really important to make sure that you have that in your contract as well. And I always like to get a W-9 because you're giving money to somebody. This is part of the flipping process. You need to 1099 this person at the end of the year that they receive this amount of money. Now let's talk about the benefits of cash for keys. Number 1, faster moves. If everybody's cooperating And this person is getting $5,000, $10,000 to move out, and that works with your numbers, that is the best outcome that anybody and everybody is going to have at the end of the day instead of going through the eviction process and the court process. Number 2, better numbers. And better numbers, if it takes you 3 or 4 months and you have a hard money loan on this property and those loan fees are adding up every month, your numbers aren't going to be as good as if you get this person out within, let's say, 2 weeks or 30 days at the most by using cash for keys. So literally, if I get somebody out within 30 days and rehab it in 60 days, I'm in and out in 90 days. Where if I have to take this person to court, that may be the entire process. They may still be in there 90 days later. So it's going to be more expensive if I have to go through the court process. Number 3, control the outcome. So if you have everything done, it's in writing, everybody knows what they're doing, you're controlling the situation. Always best to control any situation, whether it's that escrow, title, the contractor, whatever it is, you need to be in control of this entire flip process. Number 4, it is possible and more likely that it will also benefit the tenant. So if the tenant, let's say, is paying $2,000 a month and you're giving them $5,000 to move out, they've got some money in their pocket that they can use to find another place. So it is a benefit to them as well. As you can see, there are many benefits to this technique that can result in a win-win for both parties. If you want more information on how to purchase properties with tenants, click on this video right here. I give you all the questions that you need to ask before you buy. Feel free to reach out to me anytime. I'm always here to help. See you on the next one.
