Tankless WH cost has dropped significantly, they tend to last longer and are less prone to leaks but the initial switch might require upgrading the gas line with potential higher installation price tag.

In fact two week ago I tried reasoning with a brainwashed Pace Morby follower in these forums who stated he would  happily complete a seller finance deal for more than FMV value, effectively putting him under water if he could acquire the property without using any of his money and the property cash flowed.

I know one option is to wade into the waters of private funding.

In this part of the cycle, as prices are dropping and it's harder to get financing, a motivated seller is not going to get top dollar, and most want to get rid of their headache.Two years ago, it would have been easier, but not now.

The thing I would be worried about is that these two properties will consume your entire life, you will have to overspend on both, you will overdo it on both because of the attachment and will end up with properties that are worth way more to you (emotionally) than to the open market.Your area has starkly rising insurance costs because of fires and the property in Carlsbad being near the water now has strong flood risk so your insurance and holding costs are going to keep going up and up which may hold down the overall value.

Based on the supply of homes for sale and the time of year, I predict home values will drop a little bit over this winter until early spring.

Drop your thoughts below!

Usually holding costs and lost opportunity costs far outweigh the gain in sales price.I would also have multiple exit strategies and if prices dropped more than I wanted could I keep it as a long-term investment and have the rent cover my expenses.

Could be the water, don't know. 

The water is getting in from somewhere, and if left unaddressed, it could lead to bigger issues down the road.