How To Sell an Investment Property and Make a Killing

An investment property, by definition, is a place with one simple goal: to make money. So if you want to learn how to sell an investment property, we’d wager that maximizing those profits is likely your top priority.

In many ways, the steps to selling an investment property are the same as selling a home where you live: You hire an agent (here’s how to find a real estate agent in your area) who will market your property on Realtor.com® and start bringing in potential buyers. Still, since investment properties operate under different rules taxwise than a home where you live, you’ll want to ask certain questions.

Here are the factors to consider—plus the fun part: how much money you could stand to make.

Should you sell your investment property now?

First things first: Are you sure you want to sell? Because there are other options that could drum up income—steady income—such as renting it out.

Whitney Nicely, principal broker with Whitney Buys Houses in Knoxville, TN, has more of a buy-and-hold mindset.

“It’s silly to sell the one you have unless you have a really good reason,” Nicely says. So yes, there are valid reasons to sell, but you should make sure yours make the cut.

Top reasons to sell an investment property in 2025

If you’re wondering whether now is the right time to sell your investment property, 2025 offers several compelling reasons to consider cashing out. From changing market dynamics to personal financial goals, here are the top reasons owners are choosing to sell this year:

The neighborhood is changing

If the hood is hot and you’ve made a pile of cash, it could be a good time to take your money and run. Conversely, if a neighborhood is deteriorating, you might want to get out before it falls too far.

“Even if you end up only breaking even on your property, at least you won’t lose money if the market continues to dive,” Nicely says.

The property needs massive repairs

Maybe you’re looking at a foundation or roof that needs overhauling, or another big-ticket expense on a rental house. Or, a condo you’ve invested in is due for a major assessment.

“If substantial repair work is needed, or you just don’t want to put the energy into it, it is likely a good time to move on,” says broker Jared LaFrenais, of Douglas Elliman in New York. However, you need to disclose these issues and will likely figure them into the price notes.

It’s a tax liability

Owning property, even as an investment, can bump you up a tax bracket. That’s a good reason to sell, especially if you have no interest in being a landlord. You also should take note of the potential expiration of tax abatements, notes LaFrenais.

“If, for example, your investment is a condominium in which you generate a rental income, the expiration of an abatement and the resulting tax increase will impact your finances, so consider the advantages to selling before this occurs.”

You could get a better return elsewhere

Most importantly, consider your options, LaFrenais notes: “If you have held a property for many years, it has likely increased in value, which can allow you to sell and diversify into an emerging neighborhood or multifamily homes.”

Who’s buying investment properties right now?

Today’s market offers a diverse pool of buyers for investment properties—including both investors and traditional homebuyers.

If your property is in a desirable area or move-in ready, it might attract individual buyers looking for a primary residence. This is especially common with single-family homes, townhomes, or small multifamily properties in residential neighborhoods.

Other investors may be looking to expand their rental portfolios, particularly if your property has existing tenants and a reliable rent roll. In fact, 13% of homes purchased in 2024 were purchased by an investor, according to the latest Investor Report from Realtor.com. Selling a tenant-occupied property can appeal to buyers seeking immediate cash flow.

Don’t overlook the people already living there. If your tenants are stable and interested in homeownership, offering them the chance to purchase the property could lead to a quick, smooth sale—no listing or showings required.

Understanding your potential buyer types can help you position the property more effectively, whether that means highlighting its income potential or staging it as a future home.

Tax rules you need to know before you sell

Yet with the sale of an investment property, you will incur capital gains tax. It could be a long-term capital gain, which applies to properties held for greater than a year and is taxed at a lower rate. Or the property might fall into the short-term capital gain, which is taxed like ordinary income. In most cases, it’s smart to work with a trusted adviser to figure out how taxes will affect your sale.

You might also want to know the transfer taxes in your state and determine if a 1031 exchange is a good choice. The exchange of like-kind properties might defer the recognition of capital gains at sale time, which can defer tax due. It’s a strategy LaFrenais frequently recommends.

“There is no limit to how many times you can do a 1031, so you can continue to swap like-kind properties and grow your investment tax-deferred,” LaFrenais advises.

How much profit can you make from selling?

While your exact profits will vary widely depending on your market, statistics from RealtyTrac suggest that people who flip homes—meaning buy a run-down property, renovate it, and then sell it—yield an average gross profit of $58,250, or 50% more than what they bought it for! Granted, that’s gross profits, which don’t include money spent on renovations. Still, that’s a healthy return by any standards in a very short period.

Still, though, not all investment properties are flips; others might be homes you’ve bought, held, and rented out. In those cases, the return will depend on how much prices have appreciated in your particular market, how long you’ve held the property, whether you’ve had a mortgage on the place, and other factors. But in general, if the property is held long enough, real estate prices have nowhere to go but up, so odds are you’ll come out ahead!

Tips to maximize ROI when selling an investment property

If you’ve decided to sell, the next step is making sure you get the best return possible. Here are expert-backed tips to help you maximize your investment property’s resale value:

Time your sale strategically: Market timing matters. Consider selling during peak homebuying seasons (typically spring and summer), and pay attention to local inventory and interest rate trends.
Know your tax implications: Capital gains taxes can significantly affect your bottom line. Properties held over a year qualify for long-term capital gains rates, which are lower than short-term rates. You might also consider a 1031 exchange to defer taxes if you plan to reinvest.
Make targeted improvements: Minor cosmetic upgrades like fresh paint, new fixtures, or landscaping can boost curb appeal without overcapitalizing. Focus on updates that add broad buyer appeal, not luxury renovations.
Sell with or without tenants carefully: Occupied properties might appeal to other investors looking for instant cash flow, but they can also complicate showings and limit your buyer pool. If possible, consider selling after the lease ends or offering incentives for tenant cooperation.
Work with an experienced real estate agent: Look for agents familiar with investment property sales and tax rules. A pro can help you price competitively, market effectively, and navigate disclosure laws, tenant rights, and investor-specific negotiations.
Gather documentation early: Prepare rental income records, maintenance logs, and any permits for past renovations. Transparency builds trust—and makes your property more attractive to savvy buyers.