That is an amazing story, and nice that you made a bond with your step father

Make sure this is not his first total subdivision project.Make sure all the correct insurance, bonding etc. is in placeMake sure the end buyer is prequalified for a permanent mortgage and puts up a strong deposit.

And because we're annexed into the city I have city streets, city sewer, city water and city bonds to pay for it.  

As easy as this sounds, it's not simple and usually like pulling teeth.

I am also licensed, bonded & insured in CA (General). https://www.cslb.ca.gov/Online...

Conventional Lenders (Mortgage Company/Bank/Credit Union): These lenders provide conventional real estate loan loans, the most popular being the 30-year fixed amortized loan.These loans require 3.5% - 20% down payment and require Private Mortgage Insurance if you have a down payment of less than 20%.These are the lowest cost loans you can get for acquiring properties.Private Money Lenders: These lenders provide non-conventional real estate loans using money from investors who are seeking “bond” like security with above-average returns.These loans require 25% - 35% down payment.These loans are more expensive than conventional loans, but less costly than Hard Money loans.Loan terms are usually 12 months to 30 years.Hard Money Lenders: These lenders provide non-conventional real estate loans from investors who are seeking double-digit returns over a 12-month time frame or shorter.These are the most expensive loans and they require typically 25% - 35% down.The loan terms are as short as 3 months and no longer than 18 months.Equity Partner: This is a private individual or company who invest with investors in real estate deals.They usually will bring their cash to the deal to cover down payments, closing costs and rehab costs.They usually will make the majority of the profit from a deal because they are taking the greatest risk.Some Equity Partners hedge their risk by taking a 2nd lien position against the property and having all rents assigned to them in the event of the Investor defaulting.Some Equity Partners are silent partners while others are active participants in the real estate deal.Equity Partners may enter into a Joint Venture with the Investor.Investor: The Investor is the person or company purchasing the property and creating the real estate deal.All investment fall into two categories: appreciation (buy low and sell high) or cash flow (regular cash payments).The Investor purchases the property to either sell it a higher price or to rent/lease it to generate cash payments.The money earned by the profit from the real estate deal divided by the cash investment from the Investor is the Return on Investment (ROI).All our appreciation deals generate a cash-on-cash ROI of at least 25% annualized (before taxes) and our cash flow deals generate an ROI of at least 10% annualized after taxes and depreciation.Management Company: The Management Company manages the real estate deal for their client (Wholesaler, Equity Partner or Investor).The Management Company puts the deal together to maximize their client’s ROI.The Management Company may manage one or all aspects of the real estate deal in order to manage, control and lower risks and costs.Our company charges a 1% transaction fee based on the value of each transaction (purchase, rehab and sale) and we share in the profit realized by our client after the client meets their minimum ROI.Seller: The seller of the property controls the property and may or may not be motivated to sell.

I feel that in most likely scenarios I can exit investments in stocks and bonds (though not REI necessarily!)

Although I do not give my tenants any rewards of the sort discussed here, I do forge a relationship and personal bond with them that professionalizes the relationship.

Do I need to check his insurance/bond etc?  

A capital gain is a result from the sale of a capital asset like bond, stock or real estate.