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letter showing notice of eviction - How much does it cost to evict a tenant

How much does it cost to evict a tenant?

How much does it cost to evict a tenant?

Let’s start with the background story. Many landlords believe that they’ll find a good tenant if they trust their gut and do nothing else. Often, they’re wrong and end up going through an eviction. The cost to evict a non-paying tenant runs into thousands of dollars of debt, sometimes bankruptcy, and always causes months of stress and strain.

Cost to evict a tenant?

How can you calculate the cost of eviction for your rental property?

Let’s say you charge monthly rent of $2000. and the tenants are responsible for paying the utilities.

Eviction Services

Depending on which province your property is in Canada you may not be allowed to hire an eviction service and may be required to follow the Residential Tenancies Act eviction process yourself. Many of these provinces are backlogged for literally years.

However, in Alberta, landlords are allowed to file with the Residential Tenancies Dispute Resolution Service (RTDRS), which costs approximately $75.,  plus the time you lose from your paid work to organize your case and attend court. Albertans are also allowed to get eviction help which can fast-track the process. The cost of eviction services is in the $600-$800 range, depending on the case’s complexity.

Tenant not paying rent

On average, the eviction process can take up to 5.5 months. When you factor in unpaid rent, costs to evict can accumulate very quickly.

  • One month of unpaid rent = $2000
  • Two months unpaid rent = $4000
  • Three months unpaid rent = $6000
  • Four months unpaid rent = $8000
  • Five months unpaid rent = $10,000
  • Six months unpaid rent = $12,000

Tenant not paying utilities

Single-family dwelling utilities for a family of three can average $400- 600/month, depending on usage and the season. If your tenant isn’t paying the rent, there’s little likelihood they’re paying utilities, and it takes little time to amass significant debt. One month unpaid utilities = $400

  • Two months unpaid utilities = $800
  • Three months unpaid utilities = $1200
  • Four months unpaid utilities  = $1600
  • Five months unpaid utilities = $2000
  • Six months unpaid utilities  = $2400

Cost of re-rental

Cost re-rental is the cost of cleaning, repairing, and advertising the property for new renters. Repairs, tenant showings, and tenant vetting take time, and you could lose one-two months rent depending on the season. Also depending on the level of neglect or damage, costs can run $4000 to hundreds of thousands of dollars. Factoring in one month of unpaid rent at $2000., and $4000. in repairs = $6000.

Total cost to evict a non-paying tenant @ 6 months = $21,200.

What’s the alternative?

By following a rigorous tenant screening process from the onset, you can significantly mitigate your risks by learning to separate the chaff from the grain. A thorough tenant screening process puts you on the right path to placing quality tenants who pay rent on time every month and take good care of your property. Learning an effective screening process could take 45 minutes of your time and will save you thousands of dollars and ongoing emotional pain.

Which makes more sense to you?

  • Letting non-paying tenants in without screening and paying $21,200 for 6 months
  • Learning a tenant screening process that bypasses the eviction process

Either do the work on the front end or pay dearly on the back end.

To take advantage of a proven tenant screening process – take the Find the Best Tenants masterclass. To save time and grief wondering if you’ve had your tenants complete the right legal documents buy the 10 Essential Editable Landlord Forms.

To have access to all the resources in one place – buy my book!  Canadian Landlords Handbook.

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