And finally, the L/T laws in many jurisdictions are different for O/O properties with tenants. 

Originally posted by @Cody L.

@Scott Inno First you need Trailing 12 Month and P&L, Even ask for Schedule E of the sellers Tax return. 

All numbers I am getting from the provided P&L.

Originally posted by @Cody L.

They had 2 futons in the livingroom that folded out into beds,  then they had built a kind of "L" shaped wall out of recycled doors (it actually looked pretty cool) and put a bunk bed that was a full on bottom and a twin on top on the other side of it.  

@Scott L. and @Carl Fischer, unfortunately simply 1031ing and buying in a state with a lower tax will not help @Ouman You as long as he lives in CA. 

Minimize tax, I would explore the Roth conversion ladder as mentioned from @jeremylohmanhttps://www.moneyunder30.com/roth-ira-conversion-l...Next, protecting from market swings, I would simply take your money out of the market. 

Here are the properties that have interested me (not sure if either are section 8):Duplex built in 2002 consisting of 3/2 1050sq/ft each for $94,900Currently both units occupied with $670/month leases (not sure of the lease terms).New roof in 2015, new Central A/C units in 2013 and 2015.Outside looks good, inside looks clean with decent kitchens (basic L shaped) with laminate counters, tile floor in kitchens, what looks to be berber carpeting everywhere else.

@Cody L.