You would be the one that eventually be taking the risk of trying to sell the property @ that appraised price or higher later.If the property appraises for less than you paid you could pay him off now, betting that it will appreciate in the future or the value could go down.Either way it's a gamble.  

It's like going to the casino.You play 3 hands, and you may come ahead, but if you gamble all night, the house ALWAYS wins.The larger your sample audience,  the end result will always normalize to one constant.

:(No they believe that cash flow is the only way to make money in real estate and investing in high dollar areas that have little to no cash flow but good chance of appreciation is gambling.. who ever came up with that one should be shot.. the big money is made in appreciation over time..  

They are just salesmen pretending to have your best interests while they gamble with your hard earned money .

@Harry Gamble that's true.

As for repurposing the space, I think it can be done with the right plan and investors, but it is a huge gamble to take. 

Not familiar with the area, but I would probably gamble with not getting Earthquake insurance.

Calling the city is a bit of a gamble, but one you should take.

There must be a much larger amount of people who take the gamble and fail that we don't hear about than I thought.

Lastly, everything is more expensive than you think, and as I understand it, it is more challenging to be a landlord in California.If you are betting on appreciation in the future, that might work, but it is a gamble.