Clearly your level of demand for housing in the heart of San Jose is going to be a lot higher, the demographics are more favorable, and the pricing is going to be a lot higher.

I am currently working on a house on the water  tear down and rebuild  , We have had lots of rain and its also 4 ft above sea level .  

If a "few" years means 10 years, this would be an investment that I shouldn't have made in the first place (i.e. the IRR is far below my RROR comfort level).Note:- Cap rate is irrelevant in this case, if this property is a true multifamily then cap rate can be used to estimate your exit price, but you already know it (i.e. 200k).

@adrian stamer I'm not sure how you can determine my risk level with out reviewing my deal.

There are parts of the country especially in rural areas or cold belt states where over expansion occurred and the towns demographics did not support that level of development.

I bet national inventory levels in the Spring will be sitting around 4 months of supply.I think we will start seeing a disconnect between markets....meaning all markets will not be moving in lock step.

If you're taxable income is near or above these levels, consider using Section 179 deductions to  reduce your taxable income allowing you to qualify for the qualified business income deduction.

@Anthony Dooley We're at the ground level of a brand new movement in housing!

 @Jesse PhillipsThe benefits as far as tax goes, at the surface level, are the same between SFR and multi family since they are both investment properties.

I know you'll be successful because with this level of perseverance, it's impossible to fail in the long term.