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If you reinvest the insurance payout under IRC 1033, you may defer some tax.

Here is a list of why adding ADUs in my CA market is typically a poor RE investment:1) The value added by the ADU addition is often significantly less than the cost of adding the ADU.

Long-Term takes the least amount of time, Short-Term the most.Unless you have the time & discipline for this, SELL.4) If you sell, would it make sense for you to re-invest in other rental properties?

Selling and reinvesting in higher cash-flow properties or other opportunities might provide better returns.

Many have zero experience with the community and don't understand the culture.

I also usually compound the return by reinvesting my payments, so the present 12% fund effectively returns 14.38% which is pretty awesome.  

You will not only achieve a status upgrade in the market of RE investing, you are given the opportunity to have the knowledge to back it up.

The 1031 exchange rule to defer your tax is two part 1) reinvest all your proceeds and 2) purchase a property (or properties / DSTs/TICs) with an equal or greater market value.  

@Chris Mahoo many new investors don't take the time to properly understand RE investing.1) Many are using approaches from 2010-2018 when Class A property prices were so low from the Great RE Crash that an investor could cashflow and get pretty easy Class A tenants to manage.2) If you look at what investors were doing before 2008-2010, most were buying Class B & C rentals.To make it worth while, an investor either needs to Fix & Flip or invest & hold rentals for 10+ years.- Over a 10 year period cashflow will increase as rents increase (rents typically rise faster than property taxes, insurance, etc.)- The property should be appreciating, if purchased in a good location, increasing the owner's equity/wealth.- Rents will be paying the mortgage off, increasing the owner's equity/wealth.- If you hold a rental until death, you can pass it on with a stepped-up cost basis, limiting captial gains if then sold (limited by inheritance tax limitations).Too many newbies on this site trying to replace their day job income via "passive" real estate investing w/o digging deep enough to understand how it really works.