To further simplify.

For step 1+2 , the router might have a built in DNS resolver which would eliminate the need to maintain another container or service.

For step 5, depending in the router software, with a single target (e.g. a nas running docker services) you might also be able to add a wildcard rule to catch any query for *.local.domain.com to resolve to that machine. This would simplify adding things in the future as the only thing remaining would be the caddy config.

How much a home is worth is irrelevant as long as you need a place to live. Where is he going to live if he sells it?