Investing in California

[Jason Riddle]

Hi, I live in San Francisco. I purchased my first rental property back in Oct 2022 in Texas. I was thinking about purchasing my next property somewhere in California. I'm considering getting a duplex or triplex, and living in one unit while renting the others out. My focus is appreciation, not cash flow.

Here are the cities I'm considering:
- San Diego
- Long Beach
- Santa Rosa
- Santa Cruz
- Los Angeles
- Santa Barbara

- I know with an FHA loan, I can get 3.5% down. However, I'm concerned having to put so little money down. Besides PMI insurance, is there a risk with this approach?
- At least in San Francisco, cash flow is very hard to achieve. However, there needs to be some cash flow in order to pay for the mortgage and expenses. Is cash flow still possible in the above cities?
- Do all of the above cities make it easy to build an ADU? Any estimates on cost per sq ft would be helpful.
- In general, does a SFH w/ an ADU appreciate faster than a SFH without an ADU?
- I've read that California is a pro-tenant state. Do any of the above cities tip slightly towards the landlord?
- There are other external concerns that I have i.e. state budget shortfalls, too much concentration in one job sector (ex. tech), running out of water situation, earthquakes, fires, etc., any thoughts on how others navigate this?