Hi Wendy's Mom,
Before you decide (rent vs. short sale) you should consider a lot of additional factors. First, how is your income and what does your reserve cash look like? A rental property can bring nice cash flow (even if you only break even you can realize nice tax deductions from the depreciation) but if the home is in bad shape and is likely to be a drain on your finances - repairs, maintenance, systems wearing out (how old is the furnace, a/c, etc.) can you afford those costs when they come up... and come up they will! Do you have resources you TRUST who can do repairs? How is your credit and how important is it to protect it? A short sale will be a "hit" on your credit... maybe a big hit, maybe not... depends on what your current situation looks like - but it will definitely have a negative effect. Have you managed a rental property before so that you're familiar with landlord/tenant law? My suggestion as a Realtor and Property Manager is (if you can) take your time... talk to various professionals: go to a couple of free short sale seminars, talk to Realtors and Property Managers, read up on Landlord/Tenant law and the ins and outs of being a landlord, consider your tax situation and your financial reserves to decide if you can truly afford to maintain a rental property. It's a big decision - so don't let anyone pressure you. Good luck!