Bay Area real estate investment requires a different expectation than other part of the country. If you don't speculate on the growing tech industry who pays really well, you simply can't buy anything in it. A median tech salary is about $150k and fresh grads from top schools are making that much to start with. Stock options for large companies like Google and FB are 100K+ per year. This is why you see young tech couples making 2M all cash offer.
If i were you, i would look into refi/heloc on the loan. You definitely don't want to keep too much cash in your condo. You should look at how much money can you pull out such that you will break even after all the tax deductions and depreciation. Unless you need the cash-flow to supplement your living standards, try to keep it slightly negative to maximize your portfolio. Investment debts are good debts if you can manage the risk well. Being able to borrow money at 3-4% for a business is very powerful and unique. Most people don't think they need a CPA. Of the few that think they need it, hires one after the fact. I would suggest consulting a CPA to see how an investment property will change your tax situation prior to doing it. The changes are more than you think unless you are quite savy in Tax laws.
As for your primary home. There are ways to optimize but i would not put too much calculations on it. Your home and your family is the foundation where everything is built on including your future businesses and investment opportunities. A safe neighborhood that is close to jobs and has good school system will easily take 1.5M so i don't think you are wasting money.
