Hello Everyone!

Thank you in advanced for reading this.

I help my mom with her finances and we are considering selling one of her properties to reduce our risk since we have significant assets all in Southern California. My mother has nearly zero balance in the stock market. All of her retirement funds are tied into her real estate.

Quick Asset Rundown:

Primary residence: Worth $950k, Owe $580k

Investment property 1 (IP1): Worth 1.2 mil, Owe $500k. Gross annual income $86k, Expenses $30k, NOI $56k, Cashflow minus mortgage $27k ($35k/yr total return including equity accrual)

Investment property 2: Worth 1.2 mil, owe $0. Same numbers as above minus the mortgage cost.

I am considering selling IP1 (original purchase price $750k). I'm estimating cost of sale to be $30k FSBO. Depreciated about $225k in 15 years, so I believe capital gains tax will be somewhere around $156k. This results in after-tax equity of $515k, which invested in mutual funds yielding 6% equals about $30k/year.

I will, of course, consult a CPA before moving forward but I wanted you guy's opinion. I know it's hard to quantify the actual worth of risk. I am worried of my mom having all her eggs in one basket. Would you sell, if you were in my position?