Evictions can be a nightmare for both landlords and tenants. However, understanding them and their costs helps you prevent as many evictions as possible.
Evictions typically occur because a renter broke the lease agreement. Some of the most common reasons to evict a tenant include late rent payments, illegal residents living in the unit, and pet or smoking violations.
You can limit evictions with proper tenant screening, but no landlord gets it right 100% of the time. Nor can you predict how a tenant will behave in the future, even if they initially present as an ideal renter.
When evictions happen, you should be aware of the costs and how they will affect your business. Below is an overview of the expenses associated with evictions and how you can prevent them.
Breaking Down Eviction Expenses
Legal and Court Fees
Legal fees include the cost of an attorney during the complex legal process of evicting a tenant. You’ll need someone to handle complicated paperwork and advise you of your best legal moves. Attorney fees can cost hundreds of dollars per hour.
In addition to legal fees, there are also court expenses necessary to evict a tenant. The cost to file a court claim depends on your state, but they average around $50.
Lost rent is costly. Depending on your rates, the rent you lose for the months you don’t have a tenant can add up to thousands of dollars. This is a huge hit, especially for smaller landlords.
Let’s say you have a tenant who stopped paying rent. If you wait two months to start the eviction process, then spend another month on the actual eviction process, you’ll have lost more than three months of rent by the time you can even start thinking about replacing the tenant.
Tenant Turnover Costs
Tenant turnover expenses are obligatory even when you didn’t evict the former tenant. Turnover includes the costs of cleaning, making repairs, performing maintenance, refreshing paint or flooring, advertising the vacancy, and screening new tenants for the opening. Depending on your turnover process, the total expenses can range from several hundred dollars to several thousand.
There are many other costs associated with evictions. For example, the time you lose while perusing an eviction may mean you put other projects on the back burner. You might also spend a significant amount on travel and transportation as you shuttle between home, your office, your properties, the courthouse, and other destinations. Other costs of evictions are intangible, such as the possible damage to your reputation as a housing provider.
Eviction Cost Estimate
The total cost of an eviction varies from state to state. Based on 2013 TransUnion survey data, an eviction costs $3,500 for landlords on average. However, other sources recommend setting aside up to $7,000 for an eviction.
There is a silver lining to evictions: tax deductions.
Eviction expenses are tax deductible, while unpaid rent is not. Evictions may be costly, but this means it’s ultimately better to remove a tenant than to continue letting them live in your property rent-free.
If you must evict a tenant, keep track of each expense for tax reporting purposes.
Tips for Preventing Evictions
You shouldn’t hesitate to evict a tenant when warranted, but that doesn’t mean you can’t work to prevent them. Here are a few simple steps you can take to limit evictions.
- Screen tenants thoroughly. Be sure your tenant screening process includes income checks and credit, criminal, and eviction histories. If possible, use the screening feature on your property management software. On many platforms, screening is a built-in feature you can use to help you remember to check all the boxes.
- Enforce late fees. Don’t allow tenants to build bad habits. Property management software also allows you to set up and enforce a late fee infrastructure, complete with grace periods and late fees. You can choose not to allow your tenants to make future payments until they’ve paid the previous month’s rent (and associated late fee) in full.
- Call up landlord/employee references. Fill in the gaps in a screening report. Calling up the landlord/employee references the applicant provides can help you gain valuable insight that might prevent an eviction in the future.
No landlord likes to pay for an eviction. However, when they do occur, you should be knowledgeable about and prepared for the cost. By being aware of the types of fees and tax implications of evictions, you will be better able to manage them when they happen.