Opportunity for creative land use in San Diego. Any ideas?

Question

I recently learned my dad owns a lot in La Mesa, CA, a neighborhood about 15-20 minutes outside of downtown San Diego. He mentioned he wants to do something with it but doesn't know what.

I'm sure if I put together a plan and pay for development, he would be willing to partner on something, but I need to figure out what the best option would be. Here are 2 ideas:

- build affordable modular home on the lot for long term rental. This would require substantial costs other than the home as the property would need to be connected to utilities, and apparently La Mesa charges something like 30K to connect to water.

- buy a vintage Airstream, fix it up and decorate it super hip, and operate as a vacation rental. I am a bit more comfortable with this as I have experience with STR, but in a different neighborhood. This of course would also need utilities, but we may be able to somehow tie into his house next door to the lot. The downside is that La Mesa isn't super central so not necessarily the best neighborhood for Airbnb.

I need to do more research and run the numbers on both scenarios but I wanted to see if anyone had any other ideas or input. How can I creatively use/develop this lot to benefit myself and my dad?

Karen Margrave · Answer

I don't know that area at all. But, as has been mentioned, zoning is what will determine what type of project can be built on any given parcel. Also, as we all know, real estate is all about supply and demand. Is there a demand in La Mesa for housing or short term rentals, etc.? If so, what type of housing, MFR, SFR or ?  What are the number of rental units available at any given time, plentiful or scarce? Are rents on the high or low end?

I will tell you, permitting and utilities are huge factors to be weighed, along with City requirements, set backs, curb, gutter, sidewalk, landscaping, etc. in order to be able to do any type of airbnb offering.

There's so much that goes into developing a parcel, from figuring out the highest and best use, demand, determining the actual costs associated with development. For someone without any experience it can be challenging. The problem with development is that you don't know what you don't know, and small missteps can lead to losses, so be sure there's healthy profit margins to start with.

Justin R. · Answer

Yeah, @David Faulkner is on with his comments.  I don't mind giving you my input if you want to provide the address publicly or privately - I've done multifamily in-fill, single family in-fill, and lot split projects (one of the current ones is about 10' from the La Mesa border, so I know that general market).

The hard part is figuring out how much any proposed project is going to cost, and how to control your risk in a market where labor and fees are high and the fundamentals don't necessarily support the sales prices.  As Jay said, it's its own animal.

Robert Herrera · Answer

@Denny Moody I would see if you can connect the 2 lots since they are adjacent to each other. This might allow you to tap into the current water and utilites already connected to the house. I would ask zoning what you could do.

Alan Grobmeier · Answer

@Denny Moody  This is my FWIW:  Although La Mesa is nice, it is NOT going to be a good AirBnb location when compared to the beach cities.  It is going to be the last thing on most lists, just before El Cajon and Alpine.  LOL.  My family and I are coming out on vacation this summer and we are staying in Mission Bay.

However, if you were to build something on it, it would probably make a great long term rental.  Depending on the size, $2000 a month or more.

My .02

Jay Hinrichs · Answer

@David Faulkner  Karen is the one with expreince here..  SOCAL is another animal

David Faulkner · Answer

Oh, and of course how could I forget @Jay Hinrichs ?!? ... not local, but has just a wee bit of experience in development projects :)

David Faulkner · Answer

Developing isn't my thing (yet) ... you should chat with @Karen Margrave and @Justin R. near you ...

Other than that, one of the first spots I'd visit if I were you would be the La Mesa city planning dept. and ask them about permissible use of the lot, set backs, requirements, process, etc.

What is surrounding the lot? Industrial? Multi-family? Single Family homes? That would be your first indication of what is permissible and where you should likely start your consideration of options ... you wouldn't likely want to put in something completely out of place even if you were allowed to. From there, it is pretty much an exercise in figuring out what the "highest and best use" of the lot would be that is permissible and building that in an efficient, effective, and risk mitigated manner ... that pretty much sums up development as I understand it, but then again I'm admittedly a neophyte on the subject so am as curious as the OP to hear other responses.

Other questions I'd want to try to figure out are what class of neighborhood is it? What is the average price/sf of the sold comps? What will it cost you to build out to the standards and finishes of those comps? How long will it take? And finally, what's your ROI and what is your plan B if the market tanks and/or if the bank pulls the construction loan on you mid construction? Lack of good answers for these last questions, other than seriously deep pockets (or bigger pockets? :) ), are what has kept conservative me from developing so far BTW, so I'd be happy for some expert answers.

Opportunity for creative land use in San Diego. Any ideas?

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