Quote from @Alan Asriants:
With that amount of equity and being in CA I think you have a couple decent options
1. Build an ADU. Use a home equity loan (fixed debt) instead of a HELOC (variable equity) and build an additional unit you can rent out in your own backyard. This will make it a lot easier to manage, will cost you less than buying on the market and typically you can get 1:1 rent returns. Meaning if you invest around 200,000 for a nice sized 1bed 1.5 adu Im sure you can rent close to $2000/m. Remember, investing 200,000 into an ADU won't likely increase your properties value by 200,000, but the rent potential is a great bonus. Better than buying a section 8 rental for 180,000 2000 miles away
2. SPlit lot using Sb-9. CA is pushing lot subdivisions and you can build up to 2 units per lot. Meaning you can add another unit to your existing structure and 2 more units on the new subdivided lot. You can get really creative with the financing here. Of course there are nuances and you have to have appropriate lot sizes, but worth looking into. Also you will greatly improve cash flows and now you will have 2 CA properties from one. makes as much sense as splitting a unibrow into 2 eyebrows lol
3. You can take out home equity loan and use that as a down payment on an investment property, but I'm pretty sure your return will be very poor. This is because you are leveraging your downpayment and the cost of the property.
If you are building on your own existing lot, you are sacrificing privacy for sure, but if you are comfortable with that in this stage of your life its a good way to maximize what you already have than trying to go to market and spending over $1M on a decent duplex.
My partner is a contractor in the area and if you need to connect and get some quotes or talk about any scopes of work, reach out anytime.
Thanks for the insight and suggestions Alan! Unfortunately - my current lot for my primary is 1 acre and VERY sloped, and close to a water source (creek), so the county has not even allowed me to permit my downstairs finished basement without an extremely costly renovation to our septic (over $60,000, and that doesn't count demo'ing and replacing our driveway to get to the existing tank and leachfield), and even if I could permit it, it would essentially need to be a treehouse in the redwoods due to the slope (not a bad idea though, I would actually love a livable treehouse on this lot! It could be worth talking with the contractor you mentioned to discuss this possibility). Our other property is in a fairly strict HOA in Truckee, and is .33 acres. The way the house is situated on it, I'm not sure we have enough space to build an ADU (BUT, still worth looking into!) Other option would be to sell one of these homes and buy a single family home on a larger, flatter lot with more potential to build, but then I lose these great mortgages I've got.
