This implies that an RE investor in San Diego must find other means to profit for a purchase of an SFR to make sense. 

I never want anyone to get to the closing table and be surprised that I made a profit on their home. 

Repay the HELOC, bank any profit over and above that, rinse, repeat.

We're trying to decide whether to hang onto it, become landlords and use the equity to purchase our next place or just sell, take the profit and focus on purchasing another fixer-upper in an area we foresee appreciation.

For instance, Investing in Phoenix is very profitable right now as is other parts of the country.

If an investor is a limited partner, they must understand that the gross profits will be diluted by the compensation that’s paid to the manager and should have an understanding of how much of the deal’s profits they will receive if the deal is successful.

That gets expensive and cuts into profits.  

Especially at the lower end of the market with rents in the $400-600 range, a PM is going to lose money at 8%, maybe break even at 10% and their profit is going to come in that 10-15% range.

With the case from that article, it seems to me the developer is just taking some profit by letting go of the retail space and focusing on the office space. 

If you really want to gamble your risks would be lower at the race track.