Evictions – no one likes to talk about them but sometimes they are crucial if you have a tenant violating the lease agreement. Understanding and dealing with evictions comes with being a landlord, but it has recently become an even bigger necessity with eviction moratoriums, new renter-friendly laws, and an increase in the renting population. In fact, evictions for nonpayment of rent have started to tick up with around 17% of U.S. landlords filing for eviction due to nonpayment at the end of last year.
There are numerous reasons why a landlord might have to evict a tenant, but it usually comes down to a violation of the lease agreement. For example, a tenant might have missed the rent multiple times or broke the no-pet policy by harboring a furry friend. Whatever the reason may be, evictions are pricey and can be one of the largest expenses a landlord encounters. This is why avoiding them as much as possible with thorough tenant screening is essential to running a successful rental or property management business.
Keep reading as we guide you through the types of costs associated with evictions, and, better yet, how you can avoid them.
What Are Eviction Costs
The total cost of an eviction is dependent on various factors including how long it takes and where you live. An eviction can be a costly expense for both landlords and renters not only financially, but emotionally too. Here are a few areas where you can expect to see costs if you decide to go through with the eviction process:
With evictions, you must go through the proper legal process to avoid self-help evictions. After you give eviction notice to your tenant to pay rent or cure the violation, you will need to file a complaint with the court which usually comes with a flat fee. This can range between $50-250 but, as with most landlord-tenant laws, this will vary between state laws. After the court processes your paperwork, both parties will be notified of the complaint and, in some places, the sheriff’s office will serve the notice which can also include a fee. Be sure to do your research on the local eviction process so you know where you can expect to have court costs.
Eviction lawsuits can get pretty complicated, especially if a tenant chooses to contest it. Having an eviction attorney is highly important so you can have the right professional helping you protect your business. However, remember attorney fees can become expensive as discovery, motions, and additional steps in the process can prolong an eviction, therefore increasing your legal fees.
If you are evicting a tenant for nonpayment of rent, that means unpaid rent will most likely continue to accrue throughout the eviction process. You may see months of unpaid rent as some evictions can take up to three months. While you might want to start screening renters to find a replacement tenant during the process, be prepared for the courts to rule in the tenant’s favor which would mean you would not be able to recover the previously-unpaid rent and the tenant would continue the tenancy through the end of the lease.
Property Damage Fees
For evictions related to lease violations other than nonpayment of rent, there could be damages to the property, whether it’s a hole in the wall or a broken window. You’ll most likely need to clean the rental after the tenant is evicted, and you may need to have a tenant’s belongings removed or stored if the property is considered abandoned. Depending on the rental agreement, you can most likely use the security deposit to help cover some damage costs.
Tenant Turnover Fees
After the eviction process comes to a close and the last tenant is gone, you’ll want to fill your property as soon as possible with a good tenant. If you need to get rid of large items the previous renter left behind in the rental unit, consider donating to charities that will pick them up for free. Other than that, you’ll probably have to complete your typical turnover tasks like painting or carpet cleaning, plus you’ll have to take the time to advertise and pay for any advertising materials like yard signs. All of this may take more time than a normal turnover, causing you to miss out on consistent rent.
There are some things that are priceless like your time and reputation. Both of these things are at risk when you go through an eviction. Going to court, consulting your attorney, and repairing damages to your property takes an enormous amount of time. Furthermore, some eviction cases bring unwanted publicity and tenants may decide to retaliate online by leaving bad reviews, which could make future renters skeptical.
Can you deduct eviction costs from taxes?
One of the best benefits of being a landlord is the deductions you’re able to make when you file your taxes. Luckily, there are certain costs from evictions such as repair fees, attorney fees, and court fees that are tax-deductible.
When it comes to being reimbursed for unpaid rent, it gets a little trickier and depends on your accounting method. For the cash accounting method, rent debt would be considered uncollected income, so it would not be reported as income or be deducted as an expense.
On the other hand, accrual accounting filing means landlords can recognize rental income at the start of each month – if accrued rent is included in income but not collected, then landlords are able to write it off as a bad debt. Sole proprietors can do so on the Schedule C Form. Make sure to check with your accountant as well as local and state landlord-tenant laws to know what you can and cannot deduct.
Another way to get the unpaid rent money back is through small claims court. After the tenant is evicted, you can still sue them for unpaid rent plus any other damages that were inflicted. Depending on how the eviction case goes, a judge could also order a tenant to repay you.
How to Prevent Evictions
The best way to avoid costly evictions is by having a tenant who pays rent on time and who is the perfect fit for your property. But how can you find the right tenant? Here are a few best practices landlords should follow when choosing a tenant:
- Screen applicants – Running a credit, background, and eviction history check will ensure you know who you are renting to. A screening report will give you a helpful overview to understand if the tenant can afford rent, has good credit, and has a background that you are comfortable renting to.
- Gather landlord references – Talking to a renter’s past landlord is an excellent way to gain insight into how they were as a tenant. It can also help you answer any unresolved questions about the tenant that you won’t find on a screening report.
- Get to know the renter – Talking and interviewing the tenant is a great way to get to know them and learn more about what they are looking for in a rental, as well as to see if your personalities will get along.
- Establish tenant screening criteria – Setting your own screening criteria upfront will help you choose a tenant more efficiently. For example, knowing the credit score threshold you’ll accept or what you will do if there is a previous eviction on their background check will allow you to narrow down your options faster so you won’t cut any corners.
Even if you go through the proper screening process we mentioned above, life happens and there is a chance a great tenant may run into hardship. Avoiding an eviction at all costs is still in both parties’ interests. Some alternatives to pursuing eviction proceedings include:
- Offering a cash for keys agreement where you will pay them to vacate the property so you can find a new tenant.
- Negotiating rent with the tenant to come up with a payment plan or bartering for their services.
- Only offering a month-to-month lease agreement so you can have the flexibility with a 30-day notice so you can avoid being stuck with a bad tenant for a longer lease term.
Overall, the cost of an eviction depends on a variety of factors – in the end, avoiding evictions is critical to saving you time and money as a property and real estate investors. If you are ready to fill your property with the right tenant, get started here.
FAQ on Eviction Costs
How long does the eviction process take?
The eviction process can take anywhere from one to three months but is very dependent on the case itself as well as the state you’re in. Be sure to check your state’s eviction laws so you can know what to expect – for our full guide on how to evict a tenant, visit here.
How can I check for prior evictions?
Running a screening report that includes an eviction report will easily help you see past evictions on a potential tenant’s record. It’s also useful to talk to past landlord references.
Are there alternatives to evicting a tenant?
There are a few alternatives to evictions such as a cash for keys agreement, working with the tenant to come up with a payment plan, or having shorter lease terms so you can turn over the rental more frequently.