Hi everyone,

I’m seeking some guidance on my current situation with a rental property.

The property has a 8.25% DSCR and a 5-year prepayment penalty of $15,000, with 3 years remaining. The current loan balance is $299,000, while its value, based on Zillow, is between $415,000 and $425,000. The purchase price was $405,000, and the seller covered all the closing costs.

Unfortunately, the current tenant won't be renewing the lease, and the rental market has cooled down. Since I bought the property back in 2023, I've been breaking even on the PITI expenses with the rent. However, the interest rates were very high at the time, and my realtor overestimated the rental market. This was my second rental property, and I should have passed on this one.

Considering the commissions, closing costs, depreciation recapture, and prepayment penalty, I’m likely to sell the property at a loss.

I have two more months until the tenants move out. I’m wondering if it would be better to put the property on the market to sell or rent it for a loss.

TIA