Rent at a Negative Cash Flow vs. Sell for a Loss

Owning a home has continued to be a great way to build long-term wealth. While owning a home is often a good investment for your financial future, there are situations in which you will need to sell a home and could possibly have to take a loss. If you are underwater on your home, you do have various options to consider. This can include renting a home with a potential negative cash flow or selling for a loss. It is important to carefully consider both options fully to determine which option is right for you.

Rent Out the Home

One of the options that you will have if you need to move is to rent out your home. In today’s environment, you can rent the home either as a short-term rental or under annual leases. One of the benefits of renting a home is that it can help you delay an eventual closing process. If you have a quality tenant, it could cover a lot of your bills and allow you to pay down your mortgage and wait for long-term price appreciation. Furthermore, there are tax advantages that come when owning a rental property.

While there are benefits that come with renting out a home, there are risks and drawbacks to consider as well. One of the biggest risks to consider is that you may have to operate at a loss. Finding a reliable tenant that will pay enough to cover all of your bills can be a challenge in some situations. When you factor in maintenance, vacancy losses, leasing commissions, and other costs, you may have a hard time covering all of your expenses.

Those who rent out their home also need to consider whether they are permitted to do so. Many property owners will be subject to either association or local municipality rules that can limit their ability to rent their home. It is important to understand your local regulations to ensure you are in good standing when renting out your home.

Sell the Property

Another option to consider is selling your home. One of the advantages of owning a home is that it tends to go up in value in the long term. However, there are always short-term fluctuations in prices that could make a sale unprofitable in some situations. This is particularly true if you try to sell your home within a few years of purchasing it, as any normal price appreciation may not offset the costs that can come with selling a home. You could then be in a position where you will need to take a loss to sell the property. This could either require you to give up some of your original equity or even have to pay more to pay off your loan.

If you are considering selling your home, a good option is to sell your house fast to an all-cash buyer. For those that are in the area, We Buy Houses Cincinnati is a great group to contact. At We Buy Houses Cincinnati, the team can ensure an efficient process and the ability to close quickly.

When you call We Buy Houses Cincinnati, the team can schedule an appointment to come out and evaluate your home. They can then provide you with an all-cash offer that could help you achieve your financial goals. As you will be able to reduce your holding costs and avoid real estate commissions, it could allow you to end up with more cash in your pocket. You should contact We Buy Houses Cincinnati today to learn more and schedule an in-home consultation.