Hey Diane: Who is concentrating their real estate holdings in retirement homes in the Palm Desert area? The guy from Ann Arbor probably never owned a rental and is spouting about diversification and putting money in an REIT index which is nothing like owning rental real estate. I own a lot of rentals in the Phoenix market. The values went to hell in 2008-2013, but the rents went up and tenant quality improved because of all the foreclosures and short sales. If you take the long (multi-generational) view, concentrated real estate investing is one of the best ways to build assets and a solid income stream.
My guess from the OP's written English is s/he is an immigrant. Some of those folks have done very well by patiently accumulating large rental portfolios. S/he is selling a Bay Area home likely at a record high price and socking the money away for buying real estate in a market where the cash flow numbers make more sense when that real estate goes on sale. Seems like a smart idea to me.
Hmmm, our home in NorCal is worth as much as all three of our rentals in Palm Desert, except we own the former free and clear. We will also happily live in all of our rentals in sequence and sell them off one by one later in our retirement, because they are all nice properties and we like it there. We also have the knowledge, skills and most importantly, physical ability to do the work on our rentals ourselves. Oh yeah, we own equities roughly equal to the combined value of all of our real estate holdings, have a generous pension coming, plus additional investments, so yes, I believe my insights are as relevant as anyone else's, including yours and the guy in Michigan that you are so dismissive of.
It feels like you're thinking I'm attacking their plan and that is incorrect. I am questioning whether it will be worth the hassle for them, given that the OP says that neither of them is in good health. It's generally harder for cash flow numbers to "make sense" when one must hire everything out. IMO, real estate can be an amazing way to build wealth. Once you've already accrued wealth - equities, especially low-cost index funds and/or ETFs, are a LOT easier to deal with than rental property. Yup, equities never call in the middle of the night and say that the toilet is overflowing or the pipes have broken. Or fall behind on the rent and move out in the middle of the night. Or need a new roof.
The OP has another paid-for (presumably Bay Area) home, three existing rentals in Orlando, a BBOM, and is planning to move to a much lower COLA. Putting all of that money into more RE in the same area IS putting a LOT of eggs in one basket. In fact, the question reminded me of MMM's article about the man who was rich but didn't know it, which is why I responded as I did. When they sell the paid-for former rental home* they're living in now, it will conservatively add at least another 750k to the 1.5M. Combine that with three rentals plus whatever other investments they may own and one has to ask, "What mustachian can't FIRE on that, especially in a low COLA?"
Frankly, your observation about the possibility that the OP might be an immigrant is very puzzling to me. What bearing does that have on the question? A LOT of people, possibly even yourself, have "done well by patiently accumulating large rental portfolios". Is the answer different for immigrants vs. non-immigrants? I don't think so.
To reiterate my original point: If I was in poor health at that relatively young age, I'd give a lot of thought to simplifying everything so I could relax and enjoy the maximum quality of life I had left.
*Sounds like the OP has converted their Bay Area rental into their primary residence for the favorable tax treatment. Another reason they'll be hanging around for two years. Smart.