I am in the early stages of multi-family development (here in CA as well) and felt the cost far outweighed the downside of personal exposure on something larger than 4 units.

. will the reward outweigh the risk???

If something's clean, people treat it better.Of course this is a case by case basis, but I've had clients who find the increased costs associated with renting by the room outweigh the increased income. 

The tiles are considered presumed asbestos-containing materials. you probably have to disclose the presence of asbestos in a property condition report regardless if you actually know if the tiles actually contain asbestos. the risk of becoming liable for fraudulent disclosure or misrepresentation would far outweigh the costs of sealing the tiles or removing them.  

In the future, you may realize your efforts in finding and negotiating the deal, funding the deal, then marketing and selling it, far outweighs his ability to swing a hammer.

I had some blinders on about holding the property for a minimum of 5 years and didn't consider the what ifs of needing to sell earlier.I have rent increases for cost of living (2.9%) built into the lease already, but still the flexibility of raising rents further (if the market allows) in year 4 outweighs the risk of a 5 year lease.Update: I spoke with the tenant and she was willing to work with my situation and sign a lease with a reduced term.

As far as the debt pays down with the 401k or the IRA, it sounds like in your situation the pain of the debt outweighs any penalties you might incur. 

But if your pros outweigh the cons, send it man!

That is one small risk to consider when house hacking, but the reward FAR outweighs any risk IMO.  

I value their viewpoints, but I think it makes more sense to start investing sooner because what I gain will outweigh what I save from paying off my house.