Primary Home Renovation Not Working Out

[Marc Zak]

I have recently been able to pursue my dream of a home near the beach in San Diego. This is my first primary residence; I also own two investment properties in lower cost areas that cash flow well.

The home cost 1.7 million dollars and needed about 100k in repairs on top of that to get it livable. About 60k more would make it nice.

However, the whole process of renovating has gotten me soured on the place, and it turns out to have a few issues that may not be able to be fixed.

I’m debating between selling the property and turning it into a short term rental. I think I can get 10k / month as a short term rental.

My options include:

1. 1) Sell now and lose 100k including the renovation costs and closing costs (unless I get lucky and find someone willing to buy above market)
2. 2) Turn it into a short term rental for a year and see how it goes. Any potential loss could be offset by bonus depreciation against my W2 salary. Even though the place would have negative cash flow (negative 3000 to 4000 per month), that could be offset by appreciation.
3. 3) Stay in the place as a primary residence and hold on until I could sell it at net neutral (maybe 3 more years pending how the San Diego market does)

Any advice would be appreciated! Got myself into a bit of a bind here :)