How much negative cashflow is tolerable?

[Allen Scoging]

The obvious answer is zero - it's a suicidal strategy! But, here's the full story:

I live in SoCal and currently rent but have a down payment saved and ready to buy. Unfortunately, property prices are currently detached from reality and competition is insane. It doesn't seem like a prudent move to knowingly pay over the odds just too seal a deal for a SFH. However, when my rent is almost as high as a mortgage payment, and I have a down payment saved, I can't see a reason not to buy, despite the record high prices.

I can either spend a lot for a SFH, or spend only a bit more for a duplex which I'd house hack. This would effectively give me 2 properties (units) at a much lower unit cost than I could purchase a SFH, or even two apartments/condos - with the benefit that someone else was (mostly) paying for the 2nd unit. Additionally, buying a duplex would mean I get to live in neighborhood I otherwise couldn't afford to live in. On top of that, there are the tax savings (deduct mortgage interest & property tax, depreciate 2nd unit, etc.)

If I can get hold of a duplex, I've run various scenarios through the BP calculators and the numbers never add up to be a good investment - they won't cash flow, CoC is dire etc. I've often heard people say, the California market is different, you wouldn't expect great cash flow or returns, and the investment is more about long term capital growth, in which case the conventional calculators are less applicable.

Can anyone suggest how I should analyze such a proposition to ensure I'm not committing financial suicide? As the post title suggests I'd be running a negative cashflow if the conventional assumptions are applied (% for vacancy, repairs, capex and so on). Is several hundred dollars OK? Any rules of thumb - a percentage of the price/rent? Some of my other posts have various scenarios for actual numbers I've modeled. 

Thanks!