Hi everyone,
Looking
for some advice on a potential real estate opportunity. It’s a bit
complicated, but if it works out, I really feel like it could set my
family up long-term. Here’s the situation:
Current Situation:
• I
own one rental (about $200K in equity) with great tenants who are old
high school friends. They’ve been reliable since I moved out.
• I
moved into my primary residence 3 years ago. Since then, I’ve renovated
it—most recently the kitchen—and it’s finally feeling like a modern
home. It has around $150K in equity.
• My wife and I make around $145,000/year combined. Our DTI is around 40%, so not ideal but manageable.
• We just had our first child and are looking to upgrade to a home with more land.
The Opportunity:
There’s
a unique property just outside the suburbs in the San Diego area
(Blossom Valley area). It sits on land that my wife’s dad helped develop
30+ years ago. Here’s the background:
• Her
dad built a second story on the main house (unpermitted), a small
second house (unpermitted), and a third shed like house (also
unpermitted).
• The
original owner passed Many away years ago, and the property was inherited by
the landlady, who also recently passed.
• It’s
now in a trust and controlled by her grandson—someone my wife has known
her entire life. He’s thinking about moving to Florida and wants to
offload the property.
Numbers & Details:
• Zillow/online value: ~$950,000 to $1,000,000
• His initial ask (last week): $350,000 cash
• Now asking: $550,000 cash, citing other offers around $600K
• The property includes:
• Pool (needs repairs)
• Tennis court (may need repairs)
• Solar panels
• Multiple structures (all unpermitted)
• Existing tenants (one in the shed house, another lady in part of the main house paying very little)
• Septic system needs to be expanded
• He may have a HELOC on the property
• The trust splits between him and two younger grandkids once they turn 18
• There might be complications with the trust and other family members (his mom and aunt may not get along)
My Thoughts:
• I love the land and potential—it overlooks a valley and would be an incredible place to raise our child.
• I don’t think we could get traditional financing because of the unpermitted structures and needed repairs.
• I’ve considered a hard money loan, but I believe you can’t live in the property while fixing it—which makes it tricky.
• Selling my rental feels wrong because of the great tenants, and it’s at a 3% interest rate.
• My primary is at 5%, and after all the renovations, I’d hate to let it go.
• Still,
if we could negotiate the price down to $400K–$450K, I feel like it
could be an amazing long-term investment, even if we need to fix it up
over time.
Questions:
1. Is it worth pursuing further, or does the unpermitted work and trust complications make it too risky?
2. What financing options would you explore in a situation like this?
3. Should we bring in a real estate attorney to better understand the trust and how the sale could work?
4. Any other red flags I should be thinking about?
I
know this is a long post—thanks if you’ve read this far. Just trying to
explore every angle before we move forward. My wife will likely reach
out to him since they have a lifelong relationship, but I want to have a
clear strategy before we start talking numbers.
