When investing in high cash-flow markets, I always recommend working with an investor friendly agent so you're able to gain the right insight on the different areas and the risks involved.

Short-term pains for long-term gains. 

However, when the business model of "value add via ADU addition and rehab" gains some traction in a given market, and those properties with begin to trade, there will be comps. 

The leaders of these must gain unearned trust and authority very quickly.

You’d also make all future capital gains at least partially taxable instead of tax exempt by converting your primary to a rental.

You didn’t mention the property or deal specifics, but for many deals in the recent years, there have been amazing and unusual gains due to multiple unnatural circumstances.

For example, you could create a weighted structure where a percentage of profits is based on cash contributions, and another portion compensates for rehab or management efforts.Rent Payments and Tax-Free Profits:If you structure it as an owner-occupied property, the rent you pay could be shared proportionally, but tax-free gains on resale may only apply to your share, as you’d be the owner-occupant.

My approach isn’t aiming for an overnight transformation but rather a gradual strategy where I reinvest equity gains and cash flow into scalable opportunities.

For example, let's say you are guaranteed a 7% pref and the property delivers exactly that, but then sells with a capital gain. 

Use 1031 Exchanges to Defer TaxesIf you’re selling a property, a 1031 exchange allows you to defer capital gains taxes by reinvesting the proceeds into another property.