Thinking outside the box, you could move in yourself & refinance out of that awful loan into an owner-occupied new loan…then move out.
Dissecting your 1200/mo PITI, if your insurance is $50/mo, taxes under Proposition 13 about $150, your new loan at 5% (you might do better) is around $800 per month, you could then get a $400/mo cash flow and keep the tax benefits, hoping for a rebound in prices.
Or, you could sell it before the end of the year. Cap gains taxes will hurt less now than when they go up to 20% federal from 15% now, or 39% if the Bush tax cuts are not extended. Since you’ve depreciated each year, cap gains taxes are a factor, and don’t forget California’s cap gains run about 60% of the Fed’s cap gain tax hit.
