Need Help Analyzing a Potential Deal – Complicated But Could Be Life-Changing

Hi everyone,

Looking for some advice on a potential real estate opportunity. It’s a bit complicated, but if it works out, I really feel like it could set my family up long-term. Here’s the situation:

Current Situation:

• I own one rental (about $200K in equity) with great tenants who are old high school friends. They’ve been reliable since I moved out.

• I moved into my primary residence 3 years ago. Since then, I’ve renovated it—most recently the kitchen—and it’s finally feeling like a modern home. It has around $150K in equity.

• My wife and I make around $145,000/year combined. Our DTI is around 40%, so not ideal but manageable.

• We just had our first child and are looking to upgrade to a home with more land.

The Opportunity:

There’s a unique property just outside the suburbs in the San Diego area (Blossom Valley area). It sits on land that my wife’s dad helped develop 30+ years ago. Here’s the background:

• Her dad built a second story on the main house (unpermitted), a small second house (unpermitted), and a third shed like house (also unpermitted).

• The original owner passed Many away years ago, and the property was inherited by the landlady, who also recently passed.

• It’s now in a trust and controlled by her grandson—someone my wife has known her entire life. He’s thinking about moving to Florida and wants to offload the property.

Numbers & Details:

• Zillow/online value: ~$950,000 to $1,000,000

• His initial ask (last week): $350,000 cash

• Now asking: $550,000 cash, citing other offers around $600K

• The property includes:

• Pool (needs repairs)

• Tennis court (may need repairs)

• Solar panels

• Multiple structures (all unpermitted)

• Existing tenants (one in the shed house, another lady in part of the main house paying very little)

• Septic system needs to be expanded

• He may have a HELOC on the property

• The trust splits between him and two younger grandkids once they turn 18

• There might be complications with the trust and other family members (his mom and aunt may not get along)

My Thoughts:

• I love the land and potential—it overlooks a valley and would be an incredible place to raise our child.

• I don’t think we could get traditional financing because of the unpermitted structures and needed repairs.

• I’ve considered a hard money loan, but I believe you can’t live in the property while fixing it—which makes it tricky.

• Selling my rental feels wrong because of the great tenants, and it’s at a 3% interest rate.

• My primary is at 5%, and after all the renovations, I’d hate to let it go.

• Still, if we could negotiate the price down to $400K–$450K, I feel like it could be an amazing long-term investment, even if we need to fix it up over time.

Questions:

1. Is it worth pursuing further, or does the unpermitted work and trust complications make it too risky?

2. What financing options would you explore in a situation like this?

3. Should we bring in a real estate attorney to better understand the trust and how the sale could work?

4. Any other red flags I should be thinking about?

I know this is a long post—thanks if you’ve read this far. Just trying to explore every angle before we move forward. My wife will likely reach out to him since they have a lifelong relationship, but I want to have a clear strategy before we start talking numbers.