Renting vs. Selling at a loss

Real Estate Agent with Keller Williams Realty TN R.E. License 292369

I have come across this about three times in the past week alone.  People who can make their mortgage payment but have to sell for one reason or another and are upside down.  They own more than they can get for the house and could not under the best circumstances sell without writing a substantial check to the bank to cover the loss.  

The first instinct goes to short sale.  That is selling for less than is owed and getting the lender to accept the loss.  We have seen more and more of this lately as an option to foreclosure.  

Is that the best option for the sellers?  Suppose the the house could be rented for more than what would cover their expenses, as is often the case.  Suppose the owner(s) are willing to try their hand at being a landlord?  Then, why not lease it out?  If they are not drowning in payments, and can find a tenant that can pay rent to cover the expenses, isn't this the best scenario for them?  

After a year or two or three of leasing it out, the market might be better for them to sell.  They will have that many more years of equity paid on their loan (by their tenants), and they will have had the advantage of being able to depreciate some of their expenses as they go.  They may even decide they like it (being a landlord).  They could actually make a little "extra" money renting it out.  They could go from being financially trapped to real estate investor.  When their fortunes turn around they could decide they need a few more "investment" properties.  

This may not be for everybody and each situation has its own circumstances that have to be weighed.  But often we can take the lemons life offers us, and open up a lemon aid stand.

What do you think?


Posted by

Franklin TN, Brentwood TN and Nashville Tennessee Real Estate

Keller Williams Realty
               Return to Mike's Blog List
Keller Williams Realty - Franklin
9175 Carothers Pkwy, Ste 110 | Franklin, TN 37067 | 615-778-1818
The opinions expressed by The Activerain Network and it's members and those providing comments are theirs alone, and do not reflect the opinions of Rodney Kennedy, Mike Nastri or Keller Williams Realty - Franklin, TN which is independently owned and operated. Neither Rodney Kennedy, Mike Nastri or Keller Williams Realty are responsible for the accuracy or content provided by The Community.

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Gabriela Agostinelli 07/16/2010 09:05 AM
ActiveRain Community
Tennessee Davidson County Nashville
Franklin tn Keller Williams
Nashville tn real estate
Franklin Real Estate
Nashville Real Estate
short sale and foreclosure options

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Tony and Suzanne Marriott, Associate Brokers
Haven Express @ Keller Williams Arizona Realty - Scottsdale, AZ
Serving Scottsdale, Phoenix and Maricopa County AZ

In our area renting out the house and being able to cover the expenses is extremely rare.  Short Sale is a better option than Foreclosure.

Jul 16, 2010 09:07 AM #1
Julie McLeland
BENCHMARK - Brentwood, TN

Rent it. Short sales dramatically impact credit scores. I would rather rent for a couple of years and be able to buy a decent home once the market recovers.

Jul 19, 2010 04:49 AM #2
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?


Franklin & Brentwood, TN Homes Mike Nastri

It matters to us as much as it matters to you.
Buying or Selling your home, call Mike (615) 294-3912
Spam prevention

Additional Information