Stripping zoning from local level to federal. 

While we don’t have direct experience with this, we have clients who do, and they usually report great experiences when zoning and other regulations align.

(see the red circle below)

Investors often buy these properties with a plan to gradually upgrade units and increase rents, or even redevelop them down the line if zoning laws permit.

Were they single-zone systems or multi-zone, if multi-zone how many head units? 

I'm about to go under contract on a home zoned as R-8, which according to Redfin is classified as residential multifamily.

However, this generic statement is useless for many reasons:- your two years are never identical- even if you expect them to be identical, we don't know the future, and things can change- you likely have a number of special factors that change your tax outcome, some of which I mentioned above and others mentioned in earlier comments on this threadWe are also assuming that you're selling outright for cash and not reinvesting, although you have other options such as installment sales (aka owner financing), reinvesting into REITs/DSTs, opportunity zone funds and more, as mentioned in other comments.Finally, nobody brought up what I consider the single most important factor in your decision process: you sell when you have a good offer, period.

Some items to be aware of include, but not limited to:  zoning in County may conflict with the City, utilities that belong to the City infrastructure may require that you annex the property prior to rezoning or other entitlement, County development standards may be different or less stringent than City standards which would cause the development to be non-compliant when annexed.I would echo the same as Bryant Brislin, you will definitely want to connect with someone that can navigate this process for you. 

Also what is the exact zone for coastal commission is it 6 miles from the beach?

Quote from @George Red: A hypothetical to see how people factor costs when rolling equity forward into additional purchases.For this example assume  you purchased property “A” for 100k, and put 25% down. 2 years later you sell it for 125k so you now have 50k (25k from your initial down payment + 25k in equity).