Like a Keurig PLUS a regular Mr Coffee....at one place we have a French Press and a pour over as well.

I'd love to be on the opposite side of that.One thing I heard from a real estate agent is that some of those guys have already pressed the button but are going strictly off-market to prevent people knowing their selling publicly and to cause that glut. 

If there was another avenue, like just buying the other property with a regular real estate  loan, that would be a way better move, because you were taking backward steps on quite a few other items to try to make the purchase. if you do decide to press forward, you would most likely want to do an arm loan right now, with anticipation that you will refinance the loan in 3 to 5 years when interest rates hopefully come down.

Within the LA market you will be hard pressed to find a single family unit to park the $1,000,000 in an area worth investing for an all cash deal.

More pressing, is my worry that I don't have a stringent enough vetting process in place and sometimes I let my good nature get in the way of making educated decisions.

If they press the issue make sure to request proof before any actions are taken and then resort to your lease.  

From a pure purchase and hold rental property point of view, you'll be hard pressed to make the numbers work with a town home.

Otherwise it's going to hurt once the IRS knocks on their door.Our firm presses boundaries and plays in the grey area.

While the foundation might be an issue, its not a pressing issue (my assumption).

Write the story out, including names, dates and times of contacts and send it to everybody in city government you can think of.Then send it to the press and ask them if they have a Troubleshooter type person on their staff who advocates for citizens being mistreated by businesses or government and see if they'll do a story on it.