If they are not good at property and asset management your "investment" could become a money pit with vacancy and repair expenses. 

It means your house might be your biggest financial asset — and it could open up some exciting opportunities for your future.

If they sold the asset right now at the current valuation it would wipe out 80-85% of my equity.

I would, If in this position, take the equity in the form of a HELOC and purchase a cash flowing asset that would not only pay for itself but pay for the cost of the money while putting cash into my bank account each month. 

I do not recommend someone who has never owned real estate to do a fix and flip as real estate is challenging and cost prohibitive, I recommend if never owning real estate to start with an asset that does not need major repairs. 

As far as some other comments about like kind etc, you can sell this SFR and then buy a warehouse, or vacant land or even exchange into a DST there are many other assets that are considered 'like kind'.

Keep digital records and pictures.  

He has been a great asset to many investors doing the same thing in this area.

Go search the topic "Lifestyle Asset University" here on Bigger Pockets and you will see a longer thread with a lot of opinions (most are not members) but still worth a read as there are a half a dozen paid members from our group who have commented on that thread.We were formerly called Lifestyle Asset University, but I didn't realize that you couldn't use the word University in your company name here in Utah so we changed our name to Vodyssey. 

The high end is the 20 or so co ops on 5th Avenue or Park Ave (one is on East End Avenue) that require liquid assets of $100 million + to gain board approval.