TLDR: If you are a high earner, upgrading and re-investing into a new home frequently generates sizeable profits that pay off your next home down payment and can contribute 700k to your retirement for 24 years of ownership.I'm a strong proponent of buying & holding forever unless you feel the need to re-allocate capital to be more efficient.

My long term money can get 10% in the S&P, so the extra 5% is worth it to me for a small portion of my portfolio that is allocated for higher risk/reward with a solid operator.

We provide monthly reports to our owners so they can see exactly where the breakdown of monies (income and expenses) are being allocated. 

Your time horizon, age, goals, account type, and risk tolerance all determine your allocations.

@Brad FletcherHopefully you allocated the purchase price to building(depreciable) and land(non-depreciable).

In general traditional long term rental (LTR) is cash flow negative at high LTV in coastal CA cities when properly allocating for expenses. 

Can your CPA allocate all the basis to the 2 properties you’re going to sell and keep a property with no basis shielding $120k?

I believe your time would be much better spent analyzing potential deals, and searching for those deals as opposed to trying to figure out the perfect scenario and how to allocate funds.

Do we have to allocation expenses/depreciation to business and personal based on the % of 10/200?

I look at buying stocks as buying a company where I have to trust the management team because I do not sit on the board of directors and only get an allocated amount of votes to choose the members.