I also have a background in software, having founded and sold the majority of my software company in 2014.

I'm a Realtor that has specialized in selling short sales for 18 years - have listed and sold hundreds. 

Everything you describe though is just the normal process of how taxes are reassessed when a property is sold.  

It is deferred until sold, via invisible basis reduction. 

@Jonathan Small thanks for the shoutout:)This is another copy & paste info we share here on BP. 

If your client is planning to use a loan to purchase the portfolio, they should be aware that many lenders include prepayment penalties or restrictions when properties in a portfolio are sold off individually.

The fact that you have already owned and sold a rental property gives you a great experience to start from.In terms of the best place to invest - that is whatever place meets your criteria, goals and investing style.Personally flips have not been working as well for me lately, but when we get the right BRRRR deal those are still working well.

So all of the gain and depreciation recapture are initially still tax deferred.However, like Joe said, the down side is later when sold  you lose the 1031 option. the client will pay tax on all gain and depreciation recaptured from before the 1031 also. 

Get copies of their written reports.

I'd sell because you are reaching the time when you lose the cap gains exemption and that $24K would take over 2 years of renting to get back.I had a condo that I owned for a long time and I sold it despite it being paid off and having long term tenants.