Is short sale a better option compared to renting out am a property?

UPDATED: Sep 15, 2011

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Is short sale a better option compared to renting out am a property?

I am trying to figure out if the short sale is better option than renting the house. I live in different state and renting. I do not have any intention to come back to the old house. What are the benefits of renting the property versus putting it short sale?

Asked on September 15, 2011 under Real Estate Law, Michigan


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

Whether you try and "short sale" your rental, you would end up trying to sell it less that for what is owed upon all recorded mortgages and trust deeds upon it. In order to actually close sale on a proeprty subject to a "short sale" you will need to have "short sale approval" from the lenders who have recorded mortgages or trust deeds upon the property.

The key issue is whether or not there is equity in the property and if you can service the property's debt load by renting it out to a third person where the tenant's rent pays most if not all of the rental's expenses.

If you "short sale" the property, your credit rating will take a negative hit because the property if a short sale goes through will be sold for less than what is currently owing to secured lenders upon it. Renting the property out to a third person does not harm your credit rating so long as you keep current on the property's mortgage.

Good luck.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.

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