Hey Matt, it sounds like you have already answered your own question.
This is a great time to off-load the properties for top dollar. Interest rates are low, banks are throwing money at real estate investors and the sales comps are solid for duplexes. I would talk to your CPA and run the numbers to ensure a 1031 exchange is worth it. In my experience, a 1031 forces you to pay up for a deal just to avoid taxes. This does not mean you should not seek a 1031, but you may find that paying the taxes and waiting/hunting for a better deal makes sense.
With the amount of equity you are proposing, I would trade up to a 5 unit or higher deal. They are rarely on the market, but you could drive for dollars and network to find a tired "Mom & Pop" landlord who is ready to retire.
The good news is you learned a valuable lesson. While C or D deals look great on paper, other factors need to be considered before pursuing low-income-style properties. My motto is nice properties in nice neighborhoods attract nice residents. Plus, the lower-income neighborhoods rarely appreciate as much as the moderate to middle-income neighborhoods unless they experience major gentrification. When you see Starbucks show up or a bunch of hipsters with beards (Brandon Turner types) driving Toyota Priuses, then you are better off keeping the properties.
I'm just wondering if you were to buy closer to home, could you avoid hiring a property manager and run them yourself? Or if all your units are in the same area, would your property management fee drop? Most managers drop the fee after 5, then 10 units. If they are nicer properties, it's easier to find a decent property manager as well.
Just some thoughts.
