Why Trading Cash for Keys Is Better Than Eviction

Being a landlord in 2020 has proven to be difficult, especially when it comes to the enforcement of a residential lease. I have preached the word “empathy” a lot in recent months, but there are certain situations in which “empathy” as a landlord doesn’t make up for not receiving rent from your tenant.

Utilizing the legal system in Cook County, the county in which Chicago is located, has always been a challenge, even prior to COVID-19. I assume that seasoned landlords in Chicago are not affected as badly with eviction moratoriums as landlords in other areas, because the legal system here is not supportive or utilized to enforce leases or non-paying tenants.

Obstacles to Eviction

In Chicago, when using the legal system, there are many hurdles to overcome while evicting a tenant. There will be eviction obstacles to overcome no matter what part of the country you live in, but here are some common hurdles that you may encounter some variation of.

Delivering Notice

To ensure you have the best chance of winning your case, you are required to make sure you hand-deliver the five-day notice (compared to three-day notice in most states). Tenants are knowledgeable as to their rights, and we find that when they are aware that they are being given notice, they may not open the door. You can wait for the tenant to finally leave the home or you can hire a process server for $75-$100. The process server will trace their whereabouts to hand-deliver the notice to them when it is appropriate.

Filing Costs

The U.S. average for court filing of eviction is around $50. In Cook County, the cost is $287-$500 depending on how many tenants are residing in the property. This isn’t so much a hurdle but one of the true expenses of doing business.

Serving the Suit

Once filed, the tenant must be served with the lawsuit. In Cook County, the sheriff must take the first pass at serving the lawsuit. If the sheriff is unsuccessful, the judge at the first court date, upon request, will allow the landlord to hire a process server again for another $75-$100.

This process can take up to an additional two weeks of time. We find the sheriff has about a 40% chance of successfully serving the tenant, which is due mainly to local agencies being understaffed and overworked as well as tenants successfully avoiding the local sheriff.

Trial Extensions

Even when you get to court with the tenant after they have been properly served, the tenant can ask for a continuance or request a jury trial. If they don’t show up to court, the tenant has seven days to file a request for an extension, bringing the case back to court in another two to three weeks. The options available to the tenant can add weeks, if not months, onto the process.

Landlord Possession

If the process does go smoothly and the judge grants possession to the landlord, there is more time added here. Once the process is past all the hurdles thus far, the judge will see the tenant is not following the lease and grant the landlord possession at some point in the next 14-30 days.

Tenant Removal

Following the 14-30 days, the likelihood that the tenant will leave is slim. This forces the landlord to file paperwork, for an additional fee of $60.50, with the sheriff to request that the sheriff come out to remove the tenant from the home. The act of filing the fee is not the hurdle but the undefined timeframe for the sheriff to actually come out is where the hurdle really comes in. The sheriff can take anywhere from 60 days to four months to come and evict the tenant.

Day-Before Call

Once you’ve waited two to four months for the sheriff to come out, you will receive a phone call from the sheriff the day before. It will be on you, as the landlord, to make sure this final step is completed. On the day of the actual eviction, there are many things that can go wrong, causing you to have to start back over with the sheriff.

Close-up Of A Person's Hand Holding Eviction Notice In Red Envelope

Best-Case Scenario

When you add up all that time, this is what your best-case scenario may look like.

  • 30 days before you file for eviction for a non-paying tenant
  • 14 days to get into court
  • 14 days to get possession
  • 60 days to get the sheriff out

That’s a total of 118 days to get a tenant out from the time they stop paying.

Worst-Case Scenario

Anyone who may be reading this from Illinois, or more specifically Chicago, may laugh at my best-case scenario. Below is what is more realistic.

  • 30 days before you file for eviction for a non-paying tenant
  • 30 days to get into court
  • 60 days to get possession, with delays in the court process
  • 90 days to get the sheriff out

This brings you to a total of 210 days to get a tenant out from the time they stop paying.

Out of Pocket Costs

The math that I write out for investors quite often is based on what this non-paying tenant can cost an owner over 210 days.

  • $300-$500 – eviction filing fees
  • $900-$1,800 – attorney fees
  • $0-$200 – process server
  • $3,000-$4,812.50 – seven months of mortgage
  • $875-$1,750 – seven months of taxes (range of $1,500-$3,000 annual taxes)
  • $525-$700 – seven months of insurance (range of $900-$1,200 annual premium)
  • $0-$700 – utilities paid by landlord (in multi-unit, landlord may pay normally)

That brings you to $5,350-$10,237.50 of total landlord expenses over seven months with no income.

This is just an estimate of actual expenses. Nicer homes with higher mortgage payments can anticipate that this is only half of what they would be up against. You may also have an HOA fee that can add on another $2,000-$3,000 in out-of-pocket expenses.

Writing the Check

With that being said, this article was written to help you solve the issues with these problem tenants as quickly and efficiently as possible. Cash for keys is a way for a landlord to convince a tenant to vacate a property in exchange for an agreed-upon sum of money.

In the worst-case scenario above, the hard cost will exceed $5,000 and the stress endured can take a toll on other things in your life. It may be in your best interest to strike a deal with the tenant at the 30-45-day mark to leave the following week in exchange for $1,000 or $2,000.

A lot of people, in general, have an issue with this out of sheer principle. People think it is ridiculous to pay a tenant to leave when the tenant already owes them money. The reality is that you will never see that past-due rent. You will end up spending a lot more than you are about to give if you do not follow something like a cash-for-keys process.

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