This sounds very doable. as long g as the property.is suitable for this.

The commercial lot is also vacant, on a commercial strip (mom n pop retail, banks, gas stations, etc.) 2 lots down from a moderately busy intersection in a redevelopment zone.

The backyard has a built-in gas firepit and seating area.

My Engineering degree and experience managing BIG projects in Oil & Gas have greatly helped me Fix-n-Flip and manage my own properties. 

Did your clients move cities or have a valid reason for buying another primary with 5% down in the same city?

Second option, if it's even valid, I could build a new house in one of these new communities and then have the house for another few months and sell it (assuming that it would have increased in value) Any input to any of these two strategies would be highly appreciated!

People purchased with expectations on density per existing zoning and now those expectations are no longer valid in CA.In addition, ADUs are not low cost housing. 

Or I'd have to try and work up my log hours from home depot & gas station receipts which would be a big pain in the butt.

,Bruce, holding a property for potential appreciation (i.e. not actively generating rental or business income) is a valid tax strategy. 

Joel has some valid points but, if you start talking about foreclosure rescue, you might want to check with the laws of your state regarding licensure requirements as a foreclosure consultant.