Renting at a Negative Cash Flow vs. Selling for a Loss

Should you rent at a negative cash flow or should you sell for a loss? It really depends on your personal financial situation. Let’s take a look to see whether you need to sell your house fast or whether you might be able to keep it.

Dealing With Volatile Rentals

There are many reasons you could find yourself with negative cash flow.

Sometimes, you’re dealing with negative cash flow because of one-off expenses. Maybe your roof is damaged, or your foundation is broken. You’ve spent a lot of money, but you’re going to be able to recover it in the future.

Other times, the market could just collapse. It could be that people are moving away, for instance. In this situation, it’s not likely to change in the future. You need to sell your house fast while you can.

Dealing with volatile rental rates is just part of being a landlord. Some level of risk is always possible. But there are also times when you should cut your losses rather than try to continue making a profit.

How Much Are You Losing and How Much Are You Gaining?

If you’re losing $200 a month, but you’re gaining $300 in equity, obviously the best solution is for you to continue renting out the house for as long as your cash flow can sustain it. Building equity matters. If you run out of cash, sometimes you can take out an equity loan.

But if you aren’t gaining that much in equity, it might not be worth it. In some markets, equity builds very fast. But those are usually markets where rental rates are rising too.

If you find that you can’t rent out a property for very much money, then it’s possible your equity isn’t growing substantially. And you also need to consider future repairs, such as HVAC systems, roof repairs, and so forth. There’s more money yet to lose.

Not every rental property is a good investment. If you aren’t building a solid foundation of equity in the property, it’s better to sell your house fast for the equity that you do have rather than try to chase returns that might never materialize.

Is Your Cash Flow Sustainable?

If your cash flow isn’t sustainable, then that’s it. Even if you’re gaining $300 in equity every month, if you’re losing too much to sustain yourself, then you have to sell the property.

Take a look at your personal financial situation. If you’re going to go into debt over the property, it’s better to sell your house. It’s a volatile time, the markets are shifting, and there’s no way to tell whether you’re going to be able to turn a profit.

Selling Your House Fast

Do you need to sell your house fast? We buy houses in any condition. If your house is old, ugly, or otherwise unable to be sold on the open market, it doesn’t matter to us. We have in-house contractors who are experts in renovating even the most difficult properties.

We purchase houses for cash. And that means that you can get a payout fast before you lose any more money on your rental. Not everyone wants to be managing a rental property for the rest of their life. Some people want to be able to enjoy their profits. If you want to sell your house, you should contact us as soon as possible—before you get into debt. We buy houses and can help you sell your house fast. Contact Geaux Home Buyers today to find out more. Give us a call or reach out to us online.

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