Tying up a desperate and in arrears homeowner with a purchase contract you can not perform on and in which a sale will happen ONLY if you are successful flipping the property for a higher price can cause extensive damage to the homeowners finances, credit and personal life.  

I appreciate it If you decide to approach your tenant about them purchasing the property I recommend you contact a mortgage broker first to let them know what you are considering  Your objective is to get an idea on what the potential rates they may charge your tenant when it's time to exercise the option to purchase. 

I stay north of hwy 8 because I live in north county but I believe the markets most likely to out perform San Diego general RE market are all in South Bay.  

Repairs like fixing faucets can be deducted in the year they are performed, while improvements like insulation must be capitalized and depreciated over time.

Note: I am under the impression that me material participating in this exercise will fall under the "Real Property Development or Redevelopment" activity, thereby allowing me to cost segregate the home construction cost.

The asking rent growth rate decline of 2.7% observed over the past 12 months compares unfavorably to the long-term performance of the metro, and rent growth deceleration has been shared broadly among the Los Angeles metropolitan area's thirty-seven apartment submarkets.Competitive Inventory, Household Formations, AbsorptionThe first quarter added 6,770 net new households to the Los Angeles MSA.

Maybe double check comps and make sure the marketing is performing well.

@Farzan SetayeshNot a local investor, but here is a data driven look at the market conditions in McAllen TexasTwo of the most important market performance indicators, population and median home values, have been increasing steadily for the past decade   Rents have followed a similar trend The chart to the right shows median household incomes over time, which have also been increasing. 

If it requires me to be there to make it perform for cash flow then it is a job.

Thanks,BrandonThe only way I would trust those projected returns is if they have a previous performance record to back it up.