Keep the current investment and buy another house hack to live in.

One of them is in TX, another one in MA and I am not sure about the remaining. 

I have built in the past and I do not understand how anyone can build a house for 250k that will last.As an agent I focus on high end relocation clients and many are positively surprised by the build quality compared to the south.

Once your emergency account has a reasonable amount in it, whatever that means to you, you might want to think about steering that payroll money into the investment savings account from each pay check and leave the emergency account money as is.

If so, it sounds like the 1031 exchange makes sense? 

@Blaise BevilacquaHi - I too was confused by a few things in your analysis. 

Sounds like a great plan. 

You are investing a lot of money & using a lot of the built up equity in your livelihood to be passive about it.I know this may sound pessimistic but it's more to make you aware of the reality.

This sounds like it would be primarily an investment.

This is one of the things that sound a lot easier than they are actually done.The crazy thing I learned about these CA fires is that the heat radiation is hot enough (1500-2000F) that it will ignite your furniture through the windows.