How should I diversify my SFBayArea tilted portfolio?

[John Clien]

Hi,

I am looking for some advice on how I might go about diversifying my assets, specifically around real estate. I feel that I am not diversified enough - and looking for opinions here.

Currently, my real estate consists of about 36% of my assets, a big portion of it is a single-family home rental (which used to be my primary residence) in the San Francisco area. Breakdown looks like this:

• * San Francisco: $750K equity (About $1.1M estimate with $350K mortgage, bought it at $500K). Current cashflow is about $1K / month ($3.7K rental - mortgage/taxes/expenses).
• * Texas: $150K equity (About $200K estimate with $50K mortgage, bought it at $150K). Cashflow at about $300 / month ($1.7K rental - various_expenses)

Other than “pure” real estate:

• * Crowdfunding real estate: About $200K in various (core, value-add, opportunistic). Just started this year.
• * $800K of stocks in taxable account. Mostly diversified into VTI
• * $600K in 401k, in some miscellaneous combination of FFNOX and a few others.
• (No bonds. Not much in cash other than emergency reserves)

Top of my mind right now is whether I should do anything about the San Francisco rental home. Should I keep as is?  Should I 1031 exchange and buy a property (or two) elsewhere?  Liquidate and put into high dividend stocks/ETF (although with sky-high stock price yields are low...)?

I’m about 40 years old, and do have a reasonable normal(salary) income of about $200K, but looking to hopefully semi-retire in a few years if I can, although need a few more sources of passive income as of right now.

Disaster scenario in my head is… stock markets crash(loss of stock equity), along with the tech scene here in California collapse (loss of job/rental price decline or vacancies increase), and adding icing to the cake with perhaps some earthquake affecting my real estate here (we are long due for a big one).

Feeling a bit paranoid but would rather intentionally decide what to do, whether to keep or to diversify.  Any suggestions from fellow investors & readers on what you might do?

Thanks,

John