Additionally, collecting the tenant’s portion of the rent (not covered by Section 8) can be difficult.3.

Here are a few ideas to explore that might help you get closer to homeownership in San Diego without selling:Cash-Out Refinance:Refinancing one or both of your El Centro properties could free up additional cash for a down payment without selling.

Additionally, there’s always a risk that any pet-related damages could be hidden under furniture or otherwise concealed, potentially leaving us to cover the costs if the security deposit is fully depleted by other expenses (e.g., damages or unpaid rent).

The cons as i see it include loosing the 2 of 5 year cap gain exception, typically not an ideal rental because the emphasis at purchase was buying a good home for your family and not a rental with optimal return (my ex-home consistently has the lowest cash flow for equity in my RE portfolio), not disconnected enough from the property causes addition angst on damage and may result in over improvement.  

On the positive side, it seems like you have a good potential BRRRR that you can use to purchase additional properties.

Also, here's an article with additional FAQs on cost segregation studies that you may find helpful.

Are you saying the current property being exchanged has a debt of $200k and you need an additional $200k to purchase the new property? 

I understand credit enhancements and additional guarantors are sometimes required but to be unable to cover escrow funds and to give away deal ownership for that service is kind of crazy but back to the main point, the real issue is when the Co-GP is not truthful about their true role or embellishes their portfolio/ unit count. 

In addition, I presented his was not the usual use case because he was unleveraged.  

These are just some of the additional items that will have a significant impact on carrier's rates, your premiums, and whether we start to see the insurance market soften anytime soon or not.