We know evictions can be costly for both landlords and tenants (both financially and sometimes emotionally). But recently, I heard two investors discussing who actually loses more during the process. Landlords go through the costly process of evicting, and tenants go through the costly process of losing the place they called home.
I’ve heard arguments on both sides, so I conducted a little more research to settle this debate for them.
Total Cost of Eviction for the Landlord
A great eviction cost breakdown has already been written about in a separate BiggerPockets article, so I’ll quickly summarize it here:
- Legal fees: You may want to hire an eviction attorney to handle the paperwork. Expect at least $500 in an uncontested eviction.
- Court costs: The average court costs for filing an eviction are around $50. Expect this number to increase if the tenant contests the eviction and the trial drags on.
- Sheriff fees: If you win the eviction hearing, you may need to hire a sheriff to help evict the tenant. This cost can range between $50-$400.
- Lost rent: Depending on where you live and how long it takes to evict the tenant, you could lose one to many months of rent. According to Zillow, the median rent for all property types in the U.S. in 2024 is $2,100. For simplicity, we’ll assume three months of lost rent between eviction and finding a new tenant. Estimated cost: $6,300.
- Repairs: Hopefully, the repair and cleaning costs will not be too much after the eviction. For simplicity, let’s assume a total cost of $1,500.
Total costs
Depending on the property and where you live, you can expect your total financial costs to be anywhere between $4,000-$8,000. If you’re lucky and have a great property manager, hopefully, this cost can be dramatically reduced.
Total Cost of Eviction for the Tenant
When tenants are evicted, it’s usually because they haven’t paid rent or violated their lease agreement in some way. In these cases, tenants will likely lose their security deposit, which can be anything from 50% to 100% of the monthly rate. Using the median rent price from Zillow, we can estimate this cost to be between $1,000 and $2,100.
Tenants will also incur moving costs. According to Angi, the average cost of moving rental units is between $400 and $3,000.
Meanwhile, there’s a tremendous emotional cost to the tenant as well. A 2022 study published in Preventive Medicine Reports linked evictions with a decrease in mental health, as stressful events can cause more anxiety and depression among displaced people.
All this means that tenants stand to lose, on average, between $1,400 to $5,100 and can incur substantial emotional costs that are hard to quantify.
Total Cost of Evictions for the Economy
Evictions not only affect landlords and tenants but, in aggregate, can also impact the economy. According to the U.S. Department of Housing and Urban Development (HUD), rising eviction rates are directly linked to an increase in homelessness and related to a potential decrease in workplace productivity, as evicted tenants must deal with the impacts of their situation.
If we added the total cost of eviction to both landlords and tenants, multiplying the result by the number of evictions per year, we could establish a minimum economic impact that evictions have on the economy as a whole. Using what we outlined, the total costs of eviction to both landlords and tenants is between an estimated $5,400 to $13,100. An estimated 2.7 million households receive an eviction filing each year.
So, if we multiply a minimum total eviction cost of $5,400 by 2.7 million evicted households per year, we get an estimated minimum negative impact of $14.58 billion on the economy each year due to evictions.
While this is a gross approximation, the total loss for all parties shouldn’t be ignored.
Result: Everyone loses
Evictions are a lose-lose scenario for everyone. And while sometimes they can’t be avoided, their occurrence can be minimized by following the steps outlined below.
How to Prevent Evictions as a Landlord
Whether you’re planning on hiring a property manager or self-managing your own property, BiggerPockets offers resources to set you up for property management success. Here are some tried-and-true tactics for lowering your chances of eviction.
Properly screen tenants
Arguably, the most important step is the tenant screening process. Choosing the right tenant based on background, credit, and income may significantly decrease your chances of problems in the future. Here are a few things to keep in mind when screening tenants:
- Set your minimum requirements: Typically, landlords will require tenants to have at least three times the rent amount in income, as well as no history of evictions and a minimum credit score. This is a good place to start.
- Ask for references: Being able to talk to a tenant’s previous landlord can be a wonderful opportunity to learn how they’ll act as a tenant for your property.
There’s a wonderful BiggerPockets article if you’d like to learn more about screening tenants.
Ensure the tenant understands the lease agreement
Sometimes, legal forms can be a bore to read through, and many people gloss over the details. It may be wise to walk through the agreement with the tenant, explaining every section to them and ensuring they completely understand the contract they’re signing.
If you’re curious about what should be included in a rental agreement, I recommend reading this article.
Have an automated rent payment system
Instead of having to chase down your tenants for rent every month (or hoping they remember to give you the check), you or your property manager can set up automated rent withdrawals using a platform such as Baselane or RentRedi. These platforms help automate the rent payment process by automatically withdrawing the rent from the tenant’s bank account every month. This will (hopefully) ensure rent is paid on time, every time.
Solve maintenance issues as fast as possible
No tenant likes a landlord who takes forever to fix a sink, shower, or a broken AC unit in the summer. When maintenance issues arise, this can be frustrating for the tenant. Solving their problem as fast as possible should instill goodwill between you and the tenant, and they will be more likely to renew their lease when the time comes, thus reducing your turnover costs.
Stay informed on local laws
Tenant laws can change. It’s important to stay up to date on your local jurisdiction’s landlord and tenant rights to ensure you remain compliant.
Hire an excellent property manager
If you are not managing your property yourself, it’s imperative your property manager is a rock star who properly screens tenants, ensures they understand the lease agreement, has an automated rent payment system in place, solves maintenance issues as fast as possible, and stays informed on local laws and regulations. If you’d like help finding an excellent property manager, feel free to use BiggerPockets’ Property Manager Finder.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.
