With all of that in mind, I think it would really be dependent on where you see that specific market going.

Just need to stat under the occupancy limit.Also keep in mind basement needs to be livable square footage, ie have egress and proper ceiling height. 

To give you something as a reference based on your budget (30-40% down with $1.8M), the general cap rates you will see in the Bay Area are roughly 3-5% https://www.loopnet.com/Listing/1047-Rich-Ave-Mountain-View-...https://www.loopnet.com/Listing/1180-Saranap-Ave-Walnut-Cree...You will find higher cap rates and more 20+ units buildings in SF, Oakland, and Richmond, but keep in mind of their stringent tenant laws. 

Stop hanging out with your deadbeat buddies who spend all day drinking, talking sports, and otherwise wasting away.

Marie, Please keep in mind that when you see people referencing with these funds it's because they are invested in these funds, bought the sales pitch hook, line and sinker and are being told by the operator, "don't worry about the market, we're experienced and conservative so you'll get all your money back and a tidy profit.

And considering I think a person who puts in plain black and white that integrity and character of the operator are key -- and then does something underhanded and incompetent is just mind-boggling to consider -- so I'm only left with a negative feeling about the documents these darned attorneys dream up! 

What's the details on the deal with firstwatch if you don't mind sharing. 

Indeed, to stay in compliance with fair housing, you need to treat each tenant the same, so that's something to keep in mind. 

I have come to realize I need to use a good and fair contract with a meeting of the minds.

@Jonathan Greene I don't mind them generally but when they raise huge amounts for syndications that go south that is another story.