That is in addition to clauses that require anyone that stays more than 7 nights in 12-months to apply (then it becomes our choice if they are treated as a temporary occupant or tenant) and prohibition of subleasing.

You have three choices...transfer the property and keep the loan in tact hoping they won't trigger due on sale, refinance into a loan that allows it, or simply leave things as they are. 

We purchased a much larger duplex and went from a 2/2 to a 4/2.

>I'd look to invest in small multi-family 2-4 units with a larger down payment ~50% or more (only way to produce positive cash flow here at the moment) I never understood why one would want to buy cash flow.  

Landlord-tenant regulations are a bit complex in California and getting hands on is the best way to learn before expanding into larger investments. 

Without accounting for management fees (I have not yet decided if I will try to self manage), and with planning to raise rents to typical market of $825 for each of the smaller units, and $1200 for the larger unit, does this seem like a worthy first investment? 

Others put down larger downpayments to make the cashflow work.

For our larger park we have a 'Maintenance Manager' set up for up to 24 hours per week as needed with OT for after hours emergencies. 

He is 69 and does not want to reinvest (1031 exchange), which leaves me having to make a much larger investment on my own to meet the 1031 requirements which is more than I’m willing to do at this time.

Lessons Learned: I should have transitioned to larger commercial deals sooner.