What Would an Experienced Real Estate Investor Do?

[Michael Jason]

Greetings BiggerPockets!

I've learned so much from this community and have listened to podcasts and read posts and books to the point that I'm just overwhelmed with information. I'm finding myself in a bit of a bind and could use a little guidance. So, instead of reading, I decided it's time for me to write my first post on this forum. 

Location: San Francisco Bay Area (Daly City, CA)

Type: SFR

Features: Short walk to public transportation, < 15 minutes driving to anywhere in San Francisco, 1 mile to state university

Purchase year: 2014

Added Value: Remodel $150 - $200k (Construction to add 2 legal bedrooms, bathroom, approx 600sqft living space, backyard hardscape, upstairs complete redesign, new kitchen, bathroom, electrical, plumbing, sewer lateral, water main)

Length of time for construction: 11 months (and going)

Mortgage: $917k (from initial $575k investment)

Goal: Short-term rental home in zones while living here when vacant.

Issue: Neighbors unanimously reported a building code violation, resulting in a complete halt to construction and rental / booking process. Unable to generate any income.

Resolution: Hired a project manager to deal with detailed planning of project.

Project Management & Design Fees (downstairs only) for approximately 600 sqft conversion of a finished basement with an existing newly remodeled 2 bedroom 1 bathroom, 1 wetbar area into a permitted ADU with kitchen area - ready for short-term rental over prime-time holiday season:

• Floor plan and strategic layout: $4,000
• Design: $7,000
• Finishing. Furnishing and Labor: $15,000

Questions:

1. Is this pricing average / fair?
2. This home has already peaked in the max value for work I’ve had done, everything more I do seems to not be adding value - except possibly in short-term leasing rates that I can charge. What options would an experienced investor consider? What would you do?
3. I’ve already invested so much money into this home. Admittedly, I chose finishes and design features that were more expensive than an experienced investor would have used for a home that was meant to ultimately be a rental. Now, there seems to be no way to finish the work cheaply. It doesn’t seem appropriate to just stop the quality of work that’s been done and finish the work with a rushed job. What options would an experienced investor consider? What would you do?
4. The neighborhood location is a goldmine (although area seems to be getting worse - more populated, random people walking around, traffic, etc) from my point of view. But the housing market in the Bay Area is growing a bit stagnant. I’ve considered just finishing this home, selling, and reinvesting out of state. But, I’ve invested so much money into this home at this point and have drawn out so much money that I’d only break even (worse case) or cap $50k - $100k (best case). I want to see how much this home can produce once work is complete. What options would an experienced investor consider? What would you do?
5. Upstairs, I have half finished work EVERYWHERE from things I tried to do myself, to things that my contractor never quite finished. I estimate that if I hire the same designer/manager, I will be in store for another $30,000 - $50,000 to complete. What options would an experienced investor consider? What would you do?

My sincerest appreciation to all those that've taken the time to provide good advice!

-Cheers!