At a 7% annual return, this could grow to $908K after 10 years, providing immediate liquidity and diversification.Alternatively, holding the property could yield $825K net equity after taxes in 10 years, assuming a $900K sale, with the potential to defer taxes via a 1031 exchange if reinvested into another property.

Also, if you have a below market interest note, if you wanted to sell that note for any reason in the future for liquidity you would be affecting the value of that note negatively.

Sometimes seasoned investors want to sell part of their portfolio because they are tired of managing properties, need quick liquidity, or are looking to 1031 exchange into something bigger.

Meeting a 20% down payment to avoid PMI seems manageable, although would take a big chunk of my liquid net worth, and I prefer this route over using an FHA loan.

I told her that I need proof of liquid funds sufficient to cover 25% of the purchase price and to provide proof of that.  

They are going to finance you based on your loan to value, experience, and liquidity. 

If you go over budget, you'll be forced to bring liquidity you may not have to the refi closing table.

After 12 years of accepting my full time investor lifestyle - with high income and liquidity events some years and no income others, my wife told me she was burnt out on the psychological ups and down and asked if I would consider just getting a job with a steady paycheck.  

I understand I likely won't have an HSA debit card like I do now, and that it would be harder to liquidate my investments potentially.

I have lumber liquidators, home Depot, Lowe's, and who knows what else near me (central CT).