I have a lot of confidence of on-going short-term rent appreciation (next 5 years) but less confidence of significant on-going property appreciation (I expect a leveling off but am not real confident of any prediction).High end homes (bigger and more expensive) have worse cash flow than middle class or working class homes.Note a small multiplex or your 16+ unit will experience similar rent and property appreciation to your SFR and have better initial cash flow (it will be poor initial cash for San Diego but increase with the rent appreciation).To summarize, SFR are not the best buy n hold investment option in San Diego. 

@Andreas MirzaYes, you have correctly summarized the issue. 

You want to look for similar options and see what they charge.If they are charging $1100-$1300 and have no vacancy you're in good shape, otherwise move on to another idea.So, to summarize a bit, this strategy works really well in areas where small apartments are in short supply and fairly high rents.

Summarizing..

I've summarized my understanding of their offering below. 

., most homeowners won't undertake these types of renovations and therefore can't "unlock" all the additional value themselves.So, to summarize, the two ways that flippers make money in this business are to make money when you buy (i.e., purchase so far below market value that you have equity after the renovations) and/or make money when you sell (i.e., increase the value so much with the renovations as to put the property in a new class when you sell)."

To summarize, this looks like a great property to go after... you can deal with all those details as they come up. 

@John Wright Josh summarized it nicely. 

@Brenda Mize  could you summarize what you learned about using auction.com. 

Curious as to what the Condo Ordinance/Regs are for Somerville, would you mind summarizing?