Sorry not an expert in the padsplit model but did you analyze what it would bring in as a whole home rental? 

I would still recommend getting either a foundation expert (mine was about 70 years old and had been doing foundations for 50 years) or a structural engineer to look at things if you decide to do anything at all.

The hope is to build experience and open more doors in the future for new builds.I also just had lunch with a banker on Friday who said they have been opening up and relaxing on real estate again…for everything except non-owner occupied construction - that is still a no go for them.

The provider I'm currently with isn't able to send me anything via mail, I've tried 3 different addresses and non seem to work for them.

Appreciation for the most part is non-existent unless you force it w/ improvements.  

Type 1 (owner-occupied) permits cost $300, while Type 2 (non-owner-occupied) permits cost $450 for three years. 

I work with a woman who works for a non profit org that helps place section 8 tenants into properties.

Even if you create a non-CA LLC, if you are managing the business from California, you will likely be deemed to be "doing business" in California and therefore likely subject to CA taxes.

We had meetings with him about we our business finances are in the red, not making repairs unless its a non habititable issue or saftey concern.

Given it is straightforward, non-payment you might as well do it yourself, come to the hearing with all your paperwork.