Thinking about whether to sell your rental or investment property this year? You’re not alone. With shifting rates, changing supply/demand dynamics and varying regional markets, it’s a question that deserves a careful look. Here’s a breakdown of what to consider — and how to decide whether selling now or holding on makes the most sense for you.
1. What the national market is doing
First, it helps to zoom out and understand the broader backdrop:
- According to J.P. Morgan Research, U.S. home prices are expected to increase around 3 % or less in 2025, with demand remaining subdued and inventory tight. JPMorgan Chase
- Reports from CBRE Group and others suggest real-estate investment activity is recovering in 2025, but cautiously so. cbre.com
- For residential rental markets, RCLCO projects rents will grow gradually in 2025/26 as new supply slows. RCLCO Real Estate Consulting
- Mortgage rates remain elevated (historically) and that limits affordability and potential buyer demand. BlackRock
What that means: the macro environment is stable but not booming. If you hold a property, you’re unlikely to see massive value leaps like the pandemic-era. If you sell, you’re not necessarily facing a crash either — the market isn’t collapsing but it’s not on rocket-fuel.
2. Key questions to ask about your investment
Because, of course, all real estate is local — and all investors have different goals. When deciding whether to sell or hold, run through these:
- What’s your current yield vs your cost?
- If you rent the property, what are you earning (net of expenses, management, vacancy) versus what you might earn elsewhere.
- If you’re holding primarily for appreciation, are you comfortable with slower growth and elevated interest/financing rates?
- Meredith Fogle of The List Realty says: “Investors often tell me they bought to ‘ride the wave of appreciation’ — but in 2025 the wave is more like a gentle swell than a tsunami.”
- What are your tax/timing implications?
- If you sell, will you incur significant capital gains tax (or depreciation recapture) that reduces your net proceeds?
- Could you structure a tax-deferred exchange (e.g., a 1031) if you like the idea of reinvestment but want to move into a different property class or market?
- If you hold, how much longer until you believe the market will meaningfully reward your position?
- What is the local market doing?
- Are rents growing in your area or are they stagnant?
- Is new supply coming online (especially for multifamily/residential) that might press downward on rents or occupancy?
- Are you in a region with strong population/employment growth (which tends to support investment properties) or in a slower region? The national trend may be modest (+3 % or so), but regionally you could see higher or lower. globalpropertyguide.com
- What is your cash-flow and financing situation?
- If you’re heavily leveraged, rising interest or refinancing risk could squeeze you.
- If you’re comfortable with low leverage and good cash-flow buffer, holding may be less risky.
- If the property needs major cap-ex (repairs, systems, upgrades) soon, selling before costs escalate might make sense.
- What is your personal/portfolio objective?
- Are you using this property as part of retirement/legacy planning and want long-term hold?
- Are you pivoting into something else (say shifting into less management-intensive assets, or markets)?
- Do you foresee liquidity needs or want to free up capital for other investments?
3. Scenarios: When to sell, when to hold
Here are simplified scenarios to guide decision-making:
When it may make sense to SELL now:
- You are in a market where rental growth is weak or occupancy risk is rising (i.e., oversupply coming).
- You’ve already captured a large portion of the appreciation you set out to get, and the marginal upside looks limited.
- You’d rather redeploy capital into a higher-return investment (or diversify).
- You foresee major upcoming expenses (roof, HVAC, structural) that could reduce your net returns.
- Your tax or estate planning timeline aligns with a sale.
When it may make sense to HOLD (for now):
- You’re in a strong local market with solid rental fundamentals (tight supply, rising rents).
- Your property is performing well, cash-flow is healthy, you’re comfortable being a landlord and you have longer-term horizon.
- You don’t need immediate liquidity and believe modest appreciation + cash flow will win out.
- The tax cost of selling (or the lost benefit of future depreciation) is significant.
- You’re ready to weather interest rate/market fluctuations and treat real estate as a long game.
4. The 2025 “edge” you should consider
Here are a few 2025-specific factors that may tip the balance:
- With national price growth expected at ~3 % or less, the “quick flip” mindset is less realistic. Holding may offer more value in the long run. JPMorgan Chase+1
- Elevated mortgage/interest rates mean fewer potential buyers (in rental or sales market) in some segments, which could affect your exit timing. BlackRock
- For rental properties, slowing new supply (especially in multifamily/residential) could benefit those holding — i.e., less competition means stronger rents/occupancy over time. RCLCO Real Estate Consulting
- Tax/legal/regulatory shifts (state/local) may affect landlords and investors — always best to consult your CPA/attorney.
- Your personal time horizon matters more than ever. If you plan to hold 10+ years, short-term headwinds may matter less. If you were counting on exiting in 2-3 years at big gains, that may be a riskier stance in 2025.
5. Actionable Checklist Before You Decide
Here’s a quick checklist you can run through:
- Gather your actual cash-flow numbers (rent – all expenses – vacancy allowance) for the past 12 months.
- Estimate the likely sale price if you sold today (or within your next ideal timeframe) and subtract selling costs + taxes.
- Estimate your projected hold scenario: rent growth, occupancy risk, taxes, cap-ex, financing risk for the next 3-5 years.
- Compare alternative uses of the capital (if you sold) — what could you invest in and what return would you expect?
- Consider your personal timeline — How long do you want or need to hold? What’s your risk tolerance?
- Consult your tax advisor to understand sale vs hold tax implications (capital gains, depreciation recapture, etc.).
- Consider a “hybrid” approach — you may hold for now but plan to review again in 12 or 24 months; conversely you may agree to sell but give yourself an option to continue if market conditions change.
6. Final Thoughts
There’s no one-size-fits-all answer to “sell or hold” in 2025 for investment property. Your best decision will come from combining the national macro view with your property’s local metrics and your personal objectives. As I often say: “Potential is always tempting — but realism wins when you align numbers, timing and goals.” — Meredith Fogle, The List Realty
If you’d like help running the numbers for your specific property, feel free to reach out. We’re happy to walk through the scenario with you and give you a clearer picture of hold vs sell. Because ultimately, the best strategy is the one that makes sense for you.
