How much does it cost to evict someone?
What is the real cost of processing an Eviction?
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The concept of evictions is a big taboo in the rental industry. No one likes to think or talk about them, but sometimes a problem tenant leaves you no choice after multiple lease violations. Being a landlord means that inevitably, you may have to deal with evictions.
Between new renter-friendly laws, eviction moratoriums, and an increase in the renting population, fully understanding the work and consequences an eviction entails has become a necessity. In fact, evictions for nonpayment of rent have risen recently, with roughly 17% of landlords in the United States filing for eviction due to nonpayment at the end of last year.
There are a myriad of reasons why a landlord might resort to evicting a tenant, but the most common reason is a violation of the lease agreement. For instance, a tenant may have broken the no-pet policy by adopting a new furry friend, or may have repeatedly been late on or failed to provide the rent.
Regardless of the reasons, evictions are pricey and can be one of the biggest hits to a landlord's financials. Avoiding them as much as possible with exhaustive tenant screening is key to running a successful rental or property management business.
Read on as we guide you through the various costs associated with evictions, and, more importantly, the preventative steps you can take avoid them.
What Are Eviction Costs
The total cost of an eviction will vary depending on how long it takes to progress through the courts and where you live. Here are a few types of costs you can expect to see if you decide to go through with the eviction process:
Court Fees
With evictions, you must go through the proper legal channels to avoid resorting to illegal 'self-help' evictions. After you provide an eviction notice to your tenant, you will then need to file the complaint with the court which usually comes with a flat fee. This fee typically ranges between $50-250 but this will vary between state laws, much like most landlord-tenant laws.
Both parties will be notified of the complaint once the court processes your paperwork, and, in some cities, the sheriff's office will serve the notice which can also include a fee. In order to fully understand the amount of court costs you can expect to pay. it's important to do your research on the local eviction process.
Legal Fees
You may find yourself in a situation where the tenant chooses to contest the eviction. For this reason, it's essential to have an eviction attorney to have a professional help legally protect your business. That being said, attorney fees can quickly add up due to discovery, motions, and additional steps in the legal process that can prolong an eviction, and subsequently increase your legal fees.
Lost Rent
If you are evicting a tenant for nonpayment of rent, it's highly likely that until the eviction process is over, you will continue to lose out on that rent monthly. Some evictions can take up to three months, so be prepared to go without for that time period.
Although you may be quick to find a replacement tenant during the process, prepare for the possibility of the courts ruling in favor of your problem tenant. If this happens, the tenant legally could continue their tenancy until the lease expires, and you might not be able to recover the previously-unpaid rent.
You may be able to recoup unpaid rent through small claims court. After the eviction case closes, you can still sue the tenant for unpaid rent plus any other damages. Additionally, depending on how the eviction case goes, a judge could also order a tenant to repay you the missing rent.
Property Damage Fees
Another common lease violation that leads to eviction is damage to the property, whether it's a hole in the wall or a broken window. Here are some examples of costs you will need to cover after the tenant is removed from the property:
- Cleaning costs
- Carpet replacement
- Painting
- Repairs
Depending on the lease agreement and local laws, you can use the security deposit to help cover costs of repairing the damages.
Tenant Turnover Fees
Once the evicted tenant vacates your property, you'll naturally want to fill the unit as soon as possible. Before that can happen, you'll need to complete your typical turnover tasks like painting or carpet cleaning. You'll also need to take the time to list and advertise the vacancy, and pay for any advertising materials like yard signs or social media campaigns. If the previous tenant has left behind any belongings or large items, you will need to find storage, junk removal, or charities to take the items. All of these tasks post-eviction are likely to take more time than your usual end-of-lease turnover, which in turn will cause you to miss out on your regular rental income.
Can you deduct eviction costs from taxes?
One of the major benefits of being a landlord is ability to make significant deductions when it comes time to file your taxes due to the costs of running your rental business. Many of the costs from evictions such as repair fees, attorney fees, and court fees are also tax-deductible.
Claiming unpaid rent as a deductible is a little trickier than claiming repairs and cleaning services, and wholly depends on your accounting method. If you utilize the cash accounting method, rent debt would be considered uncollected income, and as such would not be reported as income nor be considered an expense to deduct.
Landlords who use the accrual accounting method of filing recognize rental income at the start of each month. If accrued rent is included in the reported income but not collected due to non-payment, then landlords are able to write it off as a bad debt. Sole proprietors can do so on the Schedule C Form. Before filing your taxes, check with both your accountant and a real estate attorney to brush up on applicable landlord-tenant laws, as well as to understand what you can and cannot deduct.
How to Prevent Evictions
The best way to prevent costly evictions is by renting to tenants who always pay rent on time and will respect the rules you set for inhabiting your property. But finding the perfect tenant can be quite a challenge! Here are the best practices landlords can follow to find excellent tenants:
- Screen applicants - Performing a thorough credit check, background, and eviction history report will help you understand who you are renting to. A tenant screening report will inform you whether or not the tenant can afford the rent, has reliable credit, and will fit into your community safely and peacefully.
- Establish tenant screening criteria - Set your own screening criteria upfront, and uphold it for all prospective tenants. Know the credit score threshold you'll accept, and plan for what you will do if there is a previous eviction on their screening report to quickly narrow down your options.
- Get to know the renter - Interviewing the tenant prior to screening allows you to get to know them and discover what they are looking for in a rental. Taking the time to talk one on one with them will also give you a chance to see if your personalities will mesh well and lead to a positive landlord-tenant relationship.
- Gather landlord references - Try to schedule time to meet with or speak to a renter's past landlord. This is an excellent way to gain insight into their behavior as a tenant, and what you can expect during their tenancy. It can also help you answer any unresolved questions about the tenant that you won't find on a screening report.
Unfortunately, even if you have a thorough, multi-faceted tenant screening process, life happens and there is a non-zero chance that an otherwise great tenant may run into financial hardship. Avoiding an eviction at all costs is in both parties' interests. Some alternatives to pursuing eviction proceedings include:
- Negotiating with the tenant to come up with a rent payment plan or bartering for their services in exchange for rent.
- Offering a cash for keys agreement, in which you pay them to vacate the property so you can find a new tenant.
- Opting to only offer month-to-month lease agreements. These lease agreements offer you the flexibility of a 30-day notice so you can avoid being stuck with a bad tenant for a longer lease term.
FAQ on Eviction Costs
How long does the eviction process take?
Depending on the state you're in, and the case itself, the eviction process can take anywhere from one to three months. Check your state's eviction laws so you can know what to expect throughout the process.
How can I check for prior evictions?
When screening a tenant, choose a screening report that includes an eviction search. The eviction report will show you past evictions on a potential tenant's record. It's also useful to talk to the applicant's prior landlords for their insights.
Are there alternatives to evicting a tenant?
There are a few alternatives to evictions such as working with the tenant to come up with a payment plan, a cash for keys agreement, or having shorter lease terms so you can turn over the rental more frequently.
The Bottom Line
Your time and your reputation are priceless. Both of these things are at risk when you go are forced to process an eviction. Consulting your attorney, going to court, and repairing damages to your property takes an enormous amount of your valuable time. On top of that, some eviction cases bring unwanted publicity or retaliation from evicted tenants in the form of bad reviews online, which could make future renters wary of renting from you.
Overall, the cost of an eviction depends on a variety of factors; there is no singular answer. Ultimately, avoiding evictions entirely with thorough tenant screening and communication with your tenants is the best option to save you time and money as a property owner and real estate investor. Protect your investment from costly evictions by trusting a property management software like CreditLink Secure to help screen your tenants. Sign up today to see how our management and screening tools can save you valuable time and money!
Created on: 07/26/24
Author: CreditLink Secure Blog Team
Tags: eviction, cash for keys , tenant screening,