Help - Sell or Hold 60 Properies in Bay Area?

[Shannon Phillips]

I own a portfolio of 60 single family homes in the San Francisco Bay Area. All are commutable to San Francisco. My basis is low.

I cash flow about 3% net annually based upon current value of $28 million. $4.5m debt.

15 properties held free and clear. 15 have 15yr loans with a 15yr amo, sub 4% rate. The balance have 7yr fixed rate loans averaging 4% (30yr amo) that float in 2020. No prepay penalty.

I’m 48yrs old. I want to invest passively (after a potential portfolio transition) for the highest return possible via cash flow and growth.

Here is my question:

Should I “HOLD” and stay the course or “SELL” and reinvest elsewhere via 1031?

If I sell what product type do you recommend and what markets are the most attractive on a value basis with good population, job and income growth prospects?

My portfolio has performed beautifully for me in the past but I’m concerned about a future SF earthquake and wondering about the opportunity cost of staying in San Francisco relative to investing elsewhere.

I could really use your advice and help.

Thank you Bigger Pockets.