It also results in a nicer product, attracting better tenants. 

A few months of reserves might seem like an unnecessary drag on your ROI—but trust me, it’s far cheaper than the alternative.

I was planning to do cash-out, but there are several factors coming together that is making that a less attractive option (higher interest rate, longer seasoning).

Another alternative here could be refinancing although it is likely your rate is well below today's rates.This is not financial advice, I am not a lender... just sharing some insights that have been shared recently. 

We don’t have an immediate need for the cash and current rates are attractive, so would love to hear what the pro/cons of seller financing are in this situation?

If a HELOC isn’t an option, alternatives like a home equity loan, business line of credit, or a DSCR loan could work depending on your situation.

I'd look into sound reducing alternatives before you throw the baby out with the bathwater. 

With zoning changes making California’s real estate market even more attractive, now’s a great time to dive in.

I also learned they had a $50K water repair a few months earlier, which likely made it more attractive. 

Alternatively, I feel that a property manager could probably rent the property out and cash flow even after they take their cut, but I am worried about the screening process and potential tenants destroying my new home.