Promoting a rental property isn’t at all times a stroll within the park. From property preparation and shutting particulars to extra tax and tenant points related to funding properties, the stresses can add up quick. So, whether or not you’re promoting a rental house in Atlanta or a property in Denver, take a look at this Redfin information and study the fundamentals of find out how to promote a rental property with confidence in 2025.
This text assumes you personal a rental property within the U.S. At all times seek the advice of an lawyer, tax skilled, or Redfin agent for situation-specific recommendation.
3 key inquiries to ask earlier than promoting your rental property
Fascinated by promoting your rental property? Take a second to mirror on these three easy inquiries to ensure you’re arrange for achievement.
What are your monetary targets?
Take into consideration what you wish to obtain together with your cash. Are you in search of a fast revenue, aiming to unfold out your investments, or addressing a monetary want? Clarifying your motives will information your determination.
Is the market in your favor?
Take a look at the native actual property market. Are property costs rising, regular, or falling? Timing your sale based mostly on market developments can enhance your return. Additionally, see if rental demand is powerful in your space.
How will the sale have an effect on tenants and your revenue?
In case you have tenants, take into account the affect on them. Assessment the lease phrases, tenant rights, and native legal guidelines to make sure you’re compliant. You must also take into account the monetary affect of dropping your rental revenue.
Promoting with tenants vs. promoting vacant
You may promote your rental with tenants or after they transfer out – every comes with tradeoffs:
Tenant-occupied: Appeals to traders, preserves rental revenue, however could restrict showings and sale worth.
Vacant: Attracts extra conventional consumers, simpler to stage and market, however leads to misplaced revenue whereas in the marketplace.
Your technique is determined by your purchaser viewers and native rules.
The way to promote a rental propertyÂ
Step 1: Consider your targets towards present market situations
Assess your targets: Decide why you’re promoting and whether or not you wish to maximize revenue, promote rapidly, or defer taxes through a 1031 trade.
Analysis the market: Analyze native actual property developments to find out the most effective time to promote. Verify comparable rental property gross sales (comps) in your space for pricing steering.
Think about tenant standing: Assessment your lease agreements. Are tenants on a month-to-month lease or a fixed-term lease? This impacts your skill to point out or vacate the property.
Motion: Contact an area Redfin agent to get a comparative market evaluation (CMA).
Tip: Tenant-occupied properties could attraction to traders—however may deter consumers in search of a main residence.
Step 2: Familiarize your self with the tax and monetary implications
Calculate capital positive factors: Lengthy-term capital positive factors (0%, 15%, or 20%) could apply in the event you’ve held the property over a yr. Excessive-income sellers might also owe a 3.8% Internet Funding Earnings Tax.
Account for depreciation recapture: When you claimed depreciation, the IRS taxes depreciation recapture at 25% (as much as the quantity depreciated).
1031 trade: If you wish to defer taxes, take into account a 1031 trade to reinvest proceeds into one other funding property. Strict guidelines apply, you’ll want to seek the advice of an knowledgeable earlier than taking this route.
Motion: Seek the advice of a CPA or tax advisor to estimate taxes and discover methods like a 1031 trade. Collect data like buy paperwork, enchancment receipts, and depreciation schedules.
Tip: Hold all data for at the least 6 years, or indefinitely for 1031 exchanges.
Step 3: Talk with tenants and comply with native legal guidelines
Assessment lease phrases: Verify if the lease permits termination on the market or requires that tenants be allowed to remain till the lease ends. Remember that state legal guidelines for these conditions fluctuate.
Notify tenants: If you’re promoting a house with tenants, inform them of future showings and notify them of their rights.
Provide incentives (non-compulsory): To encourage cooperation or early move-out, take into account providing a cash-for-keys deal or decreased hire.
Motion: Seek the advice of a landlord-tenant lawyer or property supervisor to make sure compliance with native legal guidelines. Hold data of all correspondence.
Tip: Promoting to an investor who needs tenants in place will help simplify the method.
Step 4: Put together the property on the market
Assess the situation of property: Consider the repairs or upgrades wanted to maximise worth. Give attention to high-ROI fixes.
Stage the property: If the house is vacant, stage it to attraction to consumers. If it’s occupied, do your greatest to work with tenants to maintain it clear and accessible for showings.
Collect documentation: Collect up your property data. Which means leases, upkeep historical past, utility payments, and many others. Potential consumers will possible have an interest on this.
Motion: Rent a contractor for repairs or a stager for presentation. Schedule a pre-listing inspection to establish points upfront so that you don’t run into any surprising holdups.
Tip: Spotlight revenue potential by present hire and emptiness charges in advertising and marketing supplies for investor consumers.
Step 5: Rent your agent and set the itemizing worth
Work with an actual property agent: Discover a Redfin agent to work with and provide you with a aggressive worth based mostly on market developments.
Discover a tax advisor: Guarantee tax compliance and discover tax-saving methods.
Consider emptiness: When you’re promoting a vacant property, worth it like a main residence based mostly on comps.
Motion: Speak together with your agent and agree on a list worth.Â
Tip: In sizzling markets, underpricing barely can spark bidding wars. That stated, this technique doesn’t come with out threat.
Step 6: Market and present the property
Listing the property: Your agent will checklist the property on the MLS and promote it domestically. You’ll want to spotlight rental revenue potential in your itemizing. Past that, your agent can have native insights and connections to assist get the property out to the precise individuals.
Coordinate showings: If the property is actively occupied by a renter, schedule showings with tenant consent, following state legal guidelines. If the property is vacant, use lockboxes for straightforward entry. It may be useful to coordinate with work schedules or different set occasions.Â
Motion: Guarantee tenants are cooperative or the property is vacant for showings.
Tip: Skilled images and digital excursions appeal to extra consumers.
Step 7: Assessment gives and negotiate
Consider your gives: Evaluate your gives based mostly on worth, contingencies, and shutting timeline. Observe, investor consumers could provide money for sooner closings.
Negotiate phrases: You may counter gives to enhance worth or phrases. If the property is being rented, iron out the entire particulars of the lease switch.
Motion: Work together with your agent to evaluate gives. Seek the advice of your lawyer if phrases are advanced or you’re in search of any clarification.
Tip: Money gives from traders usually shut sooner, however could are available in decrease than financed gives.
Step 8: Navigate inspections and value determinations
Purchaser inspections: The customer will possible conduct inspections. Whereas not splendid, it’s possible you’ll want to barter repairs or alter the worth if points come up.
Appraisal: If the client makes use of financing, the lender would require an appraisal to substantiate the property’s worth.
Title search: A title firm will verify for liens or title points. These points will must be resolved earlier than the sale is finalized
Tenant cooperation: Make certain the present tenants enable entry for inspections, per lease and state legislation. These legal guidelines fluctuate by state so you’ll want to do your analysis.
Motion: Coordinate together with your agent, tenants, and repair suppliers to make sure inspections, value determinations, and title evaluations occur on schedule. Present all requested documentation rapidly to maintain the deal transferring.
Tip: Patrons usually again out through the inspection interval – staying responsive and versatile throughout this stage will help preserve your sale on monitor.
Step 9: Shut the sale
Signal closing paperwork: After diligent assessment, cross the i’s and dot the t’s on the closing assertion, deed, and different paperwork. If the property is actively being rented, switch the lease settlement to the client.
Repay your mortgage: If relevant, your mortgage lender will present a payoff assertion. The title firm will disburse the funds to repay the mortgage.
Distribute the funds: After deductions like agent commissions, closing prices, and taxes, you’ll obtain the web proceeds.
Switch utilities and keys: Coordinate with the client to switch utilities and hand over the keys.
Motion: Attend the closing (in individual or remotely) or signal paperwork prematurely. Affirm tenant notification of the brand new proprietor, if relevant.
Tip: Assessment the Closing Disclosure three days earlier than closing. That is required for financed consumers to make sure accuracy.
Step 10: Deal with your post-sale duties
Report the sale to the IRS: File Type 1099-S and report any capital positive factors in your tax return.
Hold your data: Retain closing paperwork, enchancment receipts, and depreciation data for at the least 6 years.
Motion: File taxes together with your CPA’s assist. Retailer paperwork securely. We advocate that you simply preserve digital copies as properly.
Tip: Planning on doing a 1031 trade? You’ll must work with a professional middleman and comply with strict IRS guidelines.
Pattern 12-week timeline for promoting a rental property
Week 1–2: Analysis the market, seek the advice of professionals, and tackle tenant points.
Week 3–4: Put together the property, set a worth, and checklist your property with a Redfin agent.
Week 5–6: Market the property, present the property, and assessment your gives.
Week 7–10: Do your due diligence and negotiate repairs.
Week 11–12: Shut the sale, switch possession, and file the taxes with assist from a CPA.
Take note this timeline received’t work for everybody—components like tenant lease phrases, wanted repairs, or market situations can velocity issues up or gradual them down. Use this as a normal information and alter based mostly in your particular state of affairs.
Closing ideas on promoting a rental propertyÂ
To sum all of it up, promoting a rental property is all about navigating tenant rights, focusing on your purchaser viewers, and specializing in funds. When you want hands-on steering that’s particular to your state of affairs, attain out to a Redfin agent at the moment. They’ll get you heading in the right direction to your profitable rental house sale.
