San Francisco/San Jose vacancy rates are some of the lowest in the nation and when factoring in homes on the market is nominally 3% (but i would use higher).

As another poster noted, you should see it as a blessing in disguise, as you are getting rid of one bad tenant for a nominal fee.

You'll want to hire a manager, of course, but there are companies that do this and the fee would be nominal due to the size.

Lease documents you sound like you have a handle on but if you don’t most regions have a local landlord association you can join for a nominal fee that has good attorney reviewed/court tested leases.

Based on the numbers we’ve been presented, Morris and Oceanpointe have pocketed ~$14,000,000 less what appears to be a nominal amount to the builder. 

I won't know what the basement walls look like until I get to a showing, but do these external foundation cracks seem nominal - or do they scream: "run away right now?" 

You can then out-compete other landlords on nominal rent price and tenants love having AC and a modern programmable system, all while you get a higher NOI (profit).

For ceiling/floors, that requires 1" nominal wood subfloor and finished floor, 2x10 on 16in center floor joists and 5/8" fire rated drywall (using I-joist complicates things). 

Of course this may seem nominal especially when dealing with smaller investors, but lets be honest, those seemingly small deviations have an exponential impact on the overall asset performance.

For added asset protection, add a nominal partner, e.g. 5% to your spouse or kid.