General Advice - Inherited 2 Properties

[Kevin V.]

Hello BiggerPockets community,

I'm in a pretty unique situation right now, and I'd appreciate some guidance. Unfortunately, I lost both my father and a close mentor within the past six weeks, and each left me significant real estate and some cash/investments. My sister and I inherited my dad's home, and I'll be buying her out of her half. My mentor left me his home, an inherited IRA, and some brokerage money.

Additionally, my wife and I currently own a home in Encinitas, CA, that we purchased for $795k in 2016 and is now worth about $1.5M. We also have a decent savings account and a strong income, so we’re in a good financial position to make some moves with these properties.

I’d love any advice on how to proceed, including options I might not have considered, and how to best manage or renovate these properties for the long term. Below are brief descriptions of each property along with my questions. If you know of any good resources—books, threads, podcasts—on the subject, I’d also appreciate the recommendations!

Dad's Home
Carlsbad, CA

• 7000 sq ft lot
• 1368 sq ft 3/2 home
• Worth approx. $1.5M

This property is located just a block and a half from the beach in Carlsbad, making it a prime spot. I’ve been considering it for a long-term rental, AirBnB, or even a short-term rental for professionals. I’m not super keen on having long-term tenants in a single-family home in California, but I’m open to advice on that.

The house is in decent shape but could use new flooring, a paint job, and potentially heating and/or central AC, as well as blocking/taking out the existing fireplaces (don't love the idea of fireplaces in a rental). I’m also debating whether to make it more attractive for renters by doing larger renovations. I want to keep it in the family (my grandparents originally bought it in 1957), but I’m unsure about the best way to move forward with the repairs. My main questions:

• Should I hire a general contractor to manage the entire renovation, or would it be better to hire specialized contractors for each part of the project (flooring, paint, HVAC, etc.)?
• Any advice on managing an AirBnB near the beach? Things to watch out for, especially in terms of regulations, costs, and management?
• Would a property like this be better suited for long-term or short-term rentals in your experience? Carlsbad DOES allow short-term rentals in the "Coastal Zone," which is where my dad's place is.

Mentor's Home
Mariposa, CA

• 80-acre lot
• 2000 sq ft 2/2 home (with an extra study and large living room)
• Worth approx. $750k

This is more of an emotional project for me. The home has fallen into some disrepair, particularly the exterior, and needs about $70k worth of work, mainly given its size. The interior is still in great shape, but could use some cleaning. It’s a beautiful wooden cabin-style property that I’d love to restore. Major items include clearing overgrown shrubbery, replacing doors, fixing up the deck, getting a pond running again, and removing an in-ground hot tub. I have enough time in my work schedule to dedicate to overseeing these repairs. My questions here:

• For a vacation rental in a more remote location, what should I consider when restoring and maintaining a property of this size?
• Should I consider bringing in a property manager early on if I plan to eventually rent it out as a vacation home? Or wait until it’s fully renovated?
• Any advice on making this a successful vacation rental or other ideas for how to make this property a worthwhile investment? Or should I just keep it as a passion project, see where it goes, and keep chugging as long as I'm happy lol?

OVERALL QUESTIONS

I’m wondering if there are any “gotchas” I should look out for in managing or renting either of these properties, especially regarding taxes, maintenance, or any other unexpected costs. While I could sell both properties and turn a large profit, avoiding ongoing maintenance and property taxes, I’m also interested in holding on to both properties as long-term investments.

I’ve thought about possibly doing a full demo and rebuilding a custom home in Carlsbad for personal use or to sell down the line for a significant profit. Just some thoughts to think through. I have the funds to make some moves, but I want to make sure that I informed decisions to maximize potential. Any general advice, particularly for someone who’s relatively new to managing multiple properties, would be incredibly helpful.

Thanks in advance for your insights!