Considerations are how much for the option to purchase/ (the right to purchase at a specific price in the future) Ideally for you the answer is zero.How long to exercise the option?

I have had an inner battle since day one when planning/projecting future business growth.

Seems like this would sort of kill the future possibility of STRs?

It can save you thousands on taxes as well as future liability problems. 

Sounds like a lot of Extra Strength Excedrin in your future if you go that route.

I am a big believer in being patient on the buy - aggressive on the paydowns as my tenants pay me monthly cash flow in the present and monthly principal reductions for the future.

And if you bought in CA 5 years ago in most markets you got to ride the appreciation title wave that those that dont invest in CA say you should never do and your just lucky but there are tons of lucky millionaires in CA that this happened to.So you need to define what a deal is how much work you want to put into it. and in my mind if your in the mindset of cash flow real estate for the remainder of your life then dont get put on the side lines becasue you think the market is a tad to high or that some future event is going to create a buying opp .. 

I will definitely get going on getting the houses in tip top shape and get them ready for the market.I would like to keep my holdings in California in possible, but I am not seeing anything in Sacramento that makes it worthwhile of executing a 1031 exchange at the moment.I will definitely do my due diligence and interview property managers along with verifying their references.Since this will be my first multifamily investment, I probably will be conservative and used the cash flow generated to amass the capital needed for future investment. 

In other words, GRITTY people persevere in the face of challenges to achieve a better future.

Let your realtor friend that you appreciate his time but are changing your approach and you will "keep him in mind in the future"...There are a lot of realtors who can sell you a house.