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

Being a landlord is packed full of tough decisions. And one tough decision is your exit strategy. When is it no longer worth it to continue to rent at negative cash flow? When does it make sense to sell a property for a loss?

Ultimately:

  • You shouldn’t rent at negative cash flow unless you know the situation will turn around.
  • You shouldn’t keep a property at a loss unless you know the situation will improve.

And of course, when we “know” things in real estate and finance, we mean that our educated and informed guesses lead us in that direction. There’s never any certainty in the financial markets.

Deciding whether to rent at a negative cash flow or sell for a loss can be difficult. On the one hand, you don’t want to keep losing money on your investment. On the other hand, selling for a loss may not be the best option either.

Here are some major things to consider before trying to sell your house quickly.

Can You Sustain the Mortgage?

If you’re barely making your mortgage payments, keeping the property may not be worth it. In fact, you should probably sell your house fast.

If you can’t afford the repairs, that’s another sign that you should exit the property. You should only keep the property if you’re confident you can make all the payments and still have money left over.

Do You Have an Emergency Fund? Are Your Personal Finances at Risk?

The other thing to consider is your emergency fund. A negative cash flow property could quickly deplete your savings if you don’t have much saved up. You don’t want to be in a position where you can’t afford unexpected repairs or expenses.

How Long Will the Negative Cash Flow Last?

If you’re confident that the negative cash flow is only temporary, you may want to hold onto the property. For example, if you know rents will increase soon, it may be worth waiting.

The key here is to have a timeline in mind. If you don’t think the situation will improve within a year or two, it may be time to sell.

Can You Afford the Repairs?

Another thing to consider is the condition of the property. If it’s in need of major repairs, it may not be worth it to keep it. Not only will the repairs be expensive, but they’ll also take away from your rental income. And if the repairs are extensive, they may not even be worth it in the long run.

If you can’t afford the repairs, or you don’t think they’ll add enough value to the property, it may be time to sell.

What’s the Local Market Like?

When considering whether to rent at negative cash flow or sell for a loss, it’s important to look at the local market. If prices are rising, you may be able to wait it out and sell for a profit down the road. But if prices are stagnant or falling, it may not be worth it to keep the property.

It’s also worth considering the rental market in your area. If rents are high and there’s a lot of demand, you may be able to wait out the negative cash flow. But if rents are low and there’s not much demand, it may be time to sell.

The Bottom Line: Sell Your House Fast With We Buy Houses

When it comes to deciding whether to rent at a negative cash flow or sell for a loss, there’s no easy answer. You’ll need to consider your personal financial situation, the condition of the property, and the local market conditions.

But there’s also an easy out.

If you’re currently dealing with negative cash flow or negative equity, you can sell your house fast with We Buy Houses Tulsa. We buy houses as is, so you don’t need to invest in repairs or renovations. Contact us today to find out what we can do for you.

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