Then the arguement is of cash allocation can you make a higher return on capital by paying off your mortgage sooner than investing in _________.

If you want more cash flow and want to walk away with more of the 80%, perhaps identify another market and do a 1031 exchange so as to not pay capital gains taxes.  

I had 3.5% rate, did a lot remodeling and heavy lifting, and decided to sell due to the 2/5 capital gains exclusion.

I guess im just so ignorant to where to even begin now that I have some capital for the next move.

Unfortunately it sounds like you've already missed your capital gains exclusion if you've been renting it out for more than 3 years, as it's 2 of the past 5 years. 

If you do not have the capital then you should consider partnering (Joint Venture or Syndication) with someone who does.

@Jeff Shaver You can leverage your $550K equity by selling your San Diego property through a 1031 exchange to invest in a higher-cash-flow asset, like a multifamily complex, while deferring capital gains taxes.

So you can think of it as wholesaling without the capital or willingness to close is under legal attack (in SOME states), while wholesaling without the capital $ and intent is no problem. 

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