I'm probably going to regret selling my rental home in SF 20 years from now, so to counteract the regret, I just need to redeploy the capital and try to beat a 5% compounded annual return for 20 years.

To me, nothing better communicates "we've given up on this place" than a kidney shaped patch of grass surrounded by decaying pool decking!

I've found decaying cats, possums, raccoons, rats and bats in properties I've bought and was just glad it was only a critter.

Let’s say a downturn happens, and investors are ready for it, won’t that counteract the effects of a downturn?

The 10-year-old house on the other hand may be getting to the point where the HWH needs to be replaced, the exterior needs paint, the fir (cheaper than cedar but not decay-resistant) trim boards are starting to show rot as the caulk cracks, the builder-grade windows are fogged and the skylights are leaking.

I think the expected gradual increases in interest rates will lead to a low/no gains scenario as things like higher wages/inflation counteract the affect of the increase in interest rates. 

What you want to hope is that they are found before they decay too much as this will require a special cleaning to eliminate the smell.

At the very end when you can’t use the equipment because of decay what’s the follow up, I believe in real estate you would then declair bankruptcy, and forfeit the property loan agreement without taking credit score or financial losse on the lease, im really hoping to find out , thanks for your time as well. 

Get from him IN WRITING what the stated issues are and why they are issues (i.e. code related, decay, etc), including associated costs.

Then you've got the problem(s) with decaying infrastructure (water, sewer, roads, street lights).It is not an impossible situation, but it is VERY difficult.