I believe some states license commercial vs residential real estate agents differently. 

Without responding with respect to your zoning and what is allowed locally, I will discuss what is allowed on state level because i believe it will allow what you seek.In 2025 SB 1211 (Skinner) – Multi-Family goes into effect allows an ADU (I think it specifies detached but question if that is a requirement) for each legal non ADU unit up to 8 units.  

I have a good enough income that I don't NEED to sell it for money right now, and even with a property tax bill close to $15k, I believe that beachside property in Carlsbad is a great asset (it's not like they can just make more of it).

They can advise you on your options based on your specific circumstances, including how to proceed if you believe he may be trying to delay repayment or if he is indeed facing bankruptcy.Assess the Situation: If he is experiencing cash flow issues, he may be trying to find a way to resolve them.

I believe short-term rentals can still work, but you need to really be on your game. 

Its a conventional loan, which i believe its not possible 

We're planning to start investing in real estate next spring once we reach our cash-saving goal.After some research and consideration, I believe the BRRRR strategy aligns well with our financial goals. 

It works for you but one of the most important factors is that you find willing investors to participate and not everybody can do that.I personally wouldn't invest that way either because I believe that, by trying to mix lifestyle and investment, you neither get a the best lifestyle property nor the best investment.

I believe it is what the current comps are showing between that stunner and the quick redo..

Thankfully if you are in texas, they cannot go after your primary I believe.