I'm hoping someone will clarify...RentsAdvertising / Auto & Travel / Cleaning and maintenance / Insurance / Legal / Repairs / Supplies / Taxes / UtilitiesMortgage interestDepreciationFor long-term rentals...what would be an example of CoGS?

If you seriously want to clean this up and are willing to take a risk, I would absolutely switch things into my name and begin taking care of the property as my own...it takes up to 10 years, but if you'd be willing to start caring for the property and were able to at least rent as a break even, pay taxes etc, then it's no big loss if the owner came back and stopped your claim.

They claim to have done routine inspections, but I was never informed of this water intrusion issue.

They are drained and cleaned after every guest.  

If you have a loan, you may wish to look into due-on-transfer clauses, as well as whether turning it into a rental requires you to refinance to a non-owner-occupied loan/rate.If you're going the umbrella insurance route, perhaps see if it will cover you for several things including just the routine slip and fall (like mold or earthquake).

It is a clean slate walls-and-studs-only building.

My goals with REI is to generate as much cashflow and appreciation as possible, so I can get out of the 9-5 routine, build wealth for my future, and have as much time for myself as possible.Is Southern California a tough market for beginners?

I have called a few local cleaning services but their a bit pricey and they mentioned finding someone independent may be a better fit.

It has got very difficult to clean the carpets so replacing them every time a tenant leaves is no cost efficient either.

In addition, they will need space in the common areas for their stuff as well (think refrigerator & pantry for food, etc.)No background check will show how clean they are, how they respect your space, whether they are a loud person, or a night owl, who they invite over to stay with them and such.