To Rent or Sell - Doesn't seem like there is a great option

Denver, Colorado
Personal Finance
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To Rent or Sell - Doesn't seem like there is a great option

Tyler Howrey
Member since 2026 · 4 posts · 4 votes

My wife and I purchased a newer townhome about 2 years ago in the Denver area and now unexpectedly need to relocate to the Midwest. Since purchasing our home the value of the property has decreased. This brings us to our options:

 1. SELL - The property value has decreased to the point where our 10% down payment would be erased when we sold the property - walk away not owing anything but not get anything back. 

2. Long Term Rental - In briefly looking at comps in the area we could rent out the property for ~$1200 less than the current monthly mortgage. So we would be sinking money into the property, but also building equity and have the opportunity to act as landlords. As a note: The HOA dictates that rentals must be long term rentals, no STR.

Given the current housing market conditions here in Denver - home prices down, supply increasing it seems unlikely that the market will get better in the next year or two to sell (Seems like the opposite of the stock proverb of sell high, buy low). However, we may be able to lock in lower interest rates and come out better on the renting, while building additional equity in the property. It seems like we could take the hit today, and lick our wounds on a bad deal or take a gamble renting out and slowly bleeding it for a bit either selling it when the market gets better or hoping that the gap closes and we can turn a profit on renting.

Are there any other angles that we aren't seeing? What would you do?

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G. Brian DavisPro Member
Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 854 votes
7mo

Before deciding, look at a third angle. Ask your lender if the loan is assumable, some buyers will pay a premium for a lower rate. Also confirm the true rental number with a property manager, not just comps, and see if there are ways to narrow the gap even slightly.

If the loss would create stress or limit your ability to invest elsewhere, selling and redeploying your capital might be the best move. 

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  • Kevin Sobilo
    Realtor · Hanover Twp, PA · Member since 2018 · 3k+ posts · 3k+ votes
    7mo

    @Tyler Howrey, a few thoughts:

    1. The equity built from mortgage pay-down early in a mortgage is VERY VERY SMALL. In a fully amortized 30 year mortgage you don't even hit 50% paid until something like year 22. The first several years the vast majority of your payment is interest NOT principle. 

    2. The idea that you MIGHT be able to refinance and LOSE LESS money at some point in the near future as a rental isn't persuasive either. First, there is no guarantee rates will be appreciable lower in the near future. Many people fail to realize we are near historically average rates now. We were spoiled by the ridiculously low rates we had for a long stretch. 

    3. If you have never been a landlord and would try to manage the rental from afar you are more likely to have issues because of your inexperience and distance. Issues that would further cost you money. 

    For example, an eviction for you might involve not only the court costs, but travel costs to make multiple trips back to town, plus vacancy, repairs etc. 

    Conversely, if you hire a PM, you would have additional monthly losses as a PM would take 8-10% of your rental income. 

    4. You have no control and no specific reason to believe prices will rebound in the near future. They MIGHT, BUT you don't seem to have anything to hang your hat on in that regard. So, betting on that would be more gambling than an investment decision. 

    5. You could potentially kick the tired on a lease with option to purchase where you collect a sizeable up front deposit from someone who wants to buy but cannot at this moment. They may be willing to overpay a little for the property because they want security and stability.

    However, I would personally only recommend that if you could not afford to walk away. If it was doing that or risking foreclosure that might be a viable option. 

    6. Based on everything you said, I personally would take the loss and move-on. Most people who sell before the 7 year mark would be in your situation. It is less about the market and more about your inability to anticipate your future. 

    If prices stay flat, it takes about 7 years of mortgage pay-down to cover the commissions and costs to sell a property and get your down payment back. 

    So, the fact that you are going to lose some money after only 2 years is pretty normal. 

    5Reply
  • G. Brian DavisPro Member
    Investor · Hatboro, PA · Member since 2016 · 2k+ posts · 854 votes
    7mo

    Before deciding, look at a third angle. Ask your lender if the loan is assumable, some buyers will pay a premium for a lower rate. Also confirm the true rental number with a property manager, not just comps, and see if there are ways to narrow the gap even slightly.

    If the loss would create stress or limit your ability to invest elsewhere, selling and redeploying your capital might be the best move. 

    6Reply
  • Jules Aton
    MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
    7mo

    Sell and start fresh. Chalk this up as a learning experience and the opportunity to avoid sunk cost fallacy. 

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7mo

    You can look at it a few ways depending on what the percentages amount to dollarwise-sell and if it sells for 10% less than you bought it for-how much would you have paid for rent for the last 2 years?

    Can you cover the difference in mortgage payments vs rent short term? Rent prices do go up as to house prices in the long run. If you want to rent it for a few years with the hopes that the $1200 a month short fall will go down. Having said that $1200 a month is A LOT-not sure I'd do that. If it was $500, perhaps. There are also other expenses-property taxes, insurance, repairs, vacancies, HOA fees, etc.

    I would take the loss and sell.

    0Reply
  • Tyler Howrey
    OP
    Member since 2026 · 4 posts · 4 votes
    7mo

    Really appreciate the feedback from everyone!

    Been looking into it a little more over the course of the day.

    Seems like we could likely get the gap down to $1000 per month in shortfall. Payment is $3850 and figure we could rent for $2900 or 3000. We're currently at a 6.37% rate, so even getting that a little could help close the gap. @Theresa Harris to your point if it was closer to $500 a month that would be easier to swallow since it would the difference would essentially be going to principal.

    Another detail I didn't initially mention is that we intend to move back to the Denver area in 3 years (once my wife finishes her professional degree)... obviously a lot can change in 3 years but we do really like it and have family ties here.

    0Reply
  • Tyler Howrey
    OP
    Member since 2026 · 4 posts · 4 votes
    7mo

    Also, in looking at comps found that we would like need to put in about $12k to get out of the house after closing costs, realtor fees, etc. Not get out with no cost like previously mentioned...

    0Reply
    • Kassidy BensonBusiness Member
      Professional · Denver, CO · Member since 2015 · 15 posts · 6 votes
      7mo
      Quote from @Tyler Howrey:

      Also, in looking at comps found that we would like need to put in about $12k to get out of the house after closing costs, realtor fees, etc. Not get out with no cost like previously mentioned...


       Hi Tyler, I think it makes the most sense to pay the $12K and sell. If you are paying the $1500/m subsidy to rent it you will lose the same $12K in just 8 months and you have to commit to a 12 month lease. I find that condos and townhomes don't appreciate as well over time (talking 3 years). Plus after your wife graduate degree, you'll probably be making more money and potentially life changes would mean you won't want to go back to the place that has literally been draining you for the last 3 years. I offer variable commissions for sellers that might minimize your loose if you'd like to discuss. Think of it this way... over the last 2 years you didn't pay rent $3000/m x12 = $72K. So you aren't taking a $12K loss at the end, it's actually a $60K savings. 

      0Reply
  • Denise SuppleeBusiness Member
    Realtor · Willow Grove, PA · Member since 2017 · 979 posts · 642 votes
    7mo

    Ask yourselves one question: if you did not already own this townhome, would you buy it today as an investment knowing it loses $1200 per month? If the answer is no, that usually brings clarity.

    Another angle many people overlook is opportunity cost. That monthly loss is not just a payment, it is money that could be strengthening your next purchase, building reserves, or going into investments that actually produce income.

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    4Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7mo

    If you move back in 3 years, would you want to move back into the townhome?  It would cost you at least $36K to keep it for 3 years.  Again depending on the price of the home, that could be a little (eg if it is a $1M home) or a lot (eg if it is a $300K home).

    0Reply
  • Tyler Howrey
    OP
    Member since 2026 · 4 posts · 4 votes
    7mo

    @Theresa Harris

    I think there is a reasonable chance we'd want to move back in. Market value of home is ~$525k.

    A little over $500 of that $1200 gap would be going to principal.

    Seems like the verdict from most is cut the loss and lick the wounds. Which definitely is the safer option.

    1Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    7mo

    Take the loss. I agree with what Kevin above is saying.  You don't want to be an out of state landlord, especially if you have no experience. CO is not a particularly landlord friendly state.  Hopefully where you're going you can soon make up the loss, focus on your future, and not have to worry mold in the bathroom because the tenant is a slob, or he paints your brick fireplace green. Move on and good luck.

    1Reply
  • Kenneth GarrettPro Member
    Investor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
    7mo

    @Tyler Howrey

    This sounds like you really want to keep the property. It makes sense if the plan is to return in 3 years or so. Since your HOA prohibits short term rentals, one thought is to use the mid term strategy. Not sure how your HOA defines long term, but many landlords have gone the mid term route when STR is not an option. It would probably take care of your negative cash flow if done correctly. This way it is a stop gap for you to return to your home in years to come.

    Look at Furnished Finder and see what comps in your area and are renting for and, see how they’re furnished. Potentially you could leave some of your furniture there depending on its condition.

    Might be worth exploring even if you have to spend a few dollars in furnishings.

    1Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    7mo
    Quote from @Tyler Howrey:

    My wife and I purchased a newer townhome about 2 years ago in the Denver area and now unexpectedly need to relocate to the Midwest. Since purchasing our home the value of the property has decreased. This brings us to our options:

     1. SELL - The property value has decreased to the point where our 10% down payment would be erased when we sold the property - walk away not owing anything but not get anything back. 

    2. Long Term Rental - In briefly looking at comps in the area we could rent out the property for ~$1200 less than the current monthly mortgage. So we would be sinking money into the property, but also building equity and have the opportunity to act as landlords. As a note: The HOA dictates that rentals must be long term rentals, no STR.

    Given the current housing market conditions here in Denver - home prices down, supply increasing it seems unlikely that the market will get better in the next year or two to sell (Seems like the opposite of the stock proverb of sell high, buy low). However, we may be able to lock in lower interest rates and come out better on the renting, while building additional equity in the property. It seems like we could take the hit today, and lick our wounds on a bad deal or take a gamble renting out and slowly bleeding it for a bit either selling it when the market gets better or hoping that the gap closes and we can turn a profit on renting.

    Are there any other angles that we aren't seeing? What would you do?

    You’ve got some really good answers on BP
    if you think you’re negative cash flow will be $1,000 per month I can almost guarantee it will be at least $1500.  Vacancies, tenant damage in excess of security deposit, unexpected repairs, maintenance, broker fees for leasing, etc.
    So, working with $18,000 annual negative that’s $54,000 over three years.  Let’s assume amortization of $7,000.  You’re still negative $47,000.  
    Next calculate tax effect.  It’s POSSIBLE (if you qualify by income) you can be writing off not only the $47,000 loss but deprecation as well.
    Its possible your tax savings over three years COULD be $30,000 - or more.  This could change your decision radically.
    However, deprecation tax savings is DEFERRED, not eliminated.  Another bit of analysis.
    And if a rental property is converted (back) to a personal residence, there may be further tax consequences. 
    If I could lower taxes as significantly as I suggest is possible, AND I intended to hold long term, I’d tend toward keeping and renting. If not I’d sell 
    Private Mortgage Financing Partners, LLC
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  • Jim Johnson
    Real Estate Agent · Memphis · Member since 2026 · 558 posts · 326 votes
    7mo

    You’re in the spot a lot of owners hit — it’s not a “good vs bad” choice, it’s a risk vs certainty decision.

    Right now the numbers are telling you something important: as a rental, this property is structurally negative by about $1,200/month. That’s not a small gap — that’s a long-term subsidy.

    So the real comparison is:

    Sell now
    You lock in the loss of your down payment and move on clean. No landlord risk, no HOA/repair surprises, no vacancy or tenant variables. Emotionally tough, but financially predictable.

    Rent it out
    You're effectively choosing to invest an extra ~$14k per year into this property (before repairs, vacancy, or HOA increases). Yes, you build equity — but you're also betting on:

    • future appreciation
    • stable tenants
    • no major repairs
    • HOA staying reasonable

    That’s a lot of things that need to go right just to break even later.

    The key question isn’t “will prices go back up someday?” — they probably will over the long term. It’s: Do you want to actively fund this property for years while carrying landlord risk from a distance?

    Sometimes the cleanest financial move is taking the known loss and freeing up cash flow, credit, and mental space for better opportunities later. Holding makes more sense when the property is close to breakeven — this one is meaningfully negative.

    There’s no shame in a deal not working as planned. The win is making a clear-eyed decision now, not hoping the math changes on its own.

    0Reply
  • Henry T.
    Member since 2022 · 1k+ posts · 1k+ votes
    7mo

    If you are returning in 3 years, that's different. It may be worth holding on. So consider a couple things, as I'm sure you have.

    Are you totally happy with the place? Do you think you could do better if looking today/tomorrow? If yes and no, then you've got something.

    Also, although I don't know Denver, the forecast for real estate in the next few years, (from what I've read) is flat, if not down. Rents also down. In other words forget appreciation.  I hate bursting any bubbles, you sound like a nice person.  Also, in your case, being a landlord is not an "opportunity", it can easily become a tour of duty in hell.  If you should go thru that door, I want you to raise your hand and promise you will learn EVERYTHING there is to know ( take a 4 week course maybe) about properly screening a tenant :)  Then after that, talk to some experienced landlords and ask what to really watch out for. Good luck.

    0Reply
  • Eric DeNardoPro Member
    Real Estate Agent · Denver · Member since 2020 · 364 posts · 151 votes
    7mo

    @Tyler Howrey, I'm an investor friendly realtor in Denver and you already received great advice on here. I'm happy to run comps for rents and prices to help make your decision. 

    [email protected]
    0Reply
  • Bo SmithPro Member
    Hinton, WV · Member since 2026 · 1k+ posts · 373 votes
    7mo

    Yeah that middle ground sucks. One thing I learned: run the numbers assuming you'll hold 3-5 years instead of forever vs selling now. Market cycles change, your situation changes, but cash flow today tells you if it's worth the headache. What's your biggest concern - the monthly cash flow or just being tired of landlording?

    0Reply
  • Ryan D.
    Investor · Portland, OR · Member since 2026 · 67 posts · 35 votes
    5mo

    Negative $1200 a month is a lot for a condo. Condo also does not appreciate that much that quickly in comparison to SFH at least in my market. I, personally, would take advantage summer months and get rid of it and start refresh - maybe renting as rate is still high enough to make renting a more attractive option.

    0Reply
  • Ryan FlanaganPro Member
    Accountant · Naperville, IL · Member since 2020 · 39 posts · 25 votes
    4mo

    How does it pencil out as a furnished rental? What is the minimum lease term? Perhaps consider positioning it as a midterm rental/corporate housing. 

    0Reply
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