In This Article
Key Takeaways
Evictions can cost between an estimated $4,000-$8,000 for landlords, and between $1,400-$5,100 for tenants, in addition to the mental toll an eviction takes. Evictions have an estimated negative impact of $14.58 billion on the economy, and are a lose-lose scenario for all parties involved. One of the best ways to prevent evictions is to properly screen tenants, and to only accept renters with a healthy credit score and a solid income-to-rent ratio.
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.
- 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.
- Have an automated rent payment system: Instead of having to chase down your tenants for rent every month, set up automated rent withdrawals using a platform such as Baselane or RentRedi.
- 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. Solve their problem quickly to build goodwill.
- Stay informed on local laws: Tenant laws can change, so 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, make sure your property manager is top-notch.
For more resources on preventing evictions, check out the articles on DeFi Daily News here.
Conclusion
Evictions are a costly process for both landlords and tenants, with significant financial and emotional implications. The total cost of evictions on the economy as a whole is staggering, emphasizing the need for proactive measures to prevent evictions whenever possible. By properly screening tenants, ensuring lease agreements are understood, implementing automated rent payment systems, addressing maintenance issues promptly, staying informed on local laws, and hiring excellent property managers, landlords can minimize the risk of evictions and create a more stable rental environment for all parties involved. Let’s work together to make evictions a rare occurrence and ensure that everyone has a safe and secure place to call home.
