If you choose a city that has a lower cost of entry point but a nice level of rental cost you could use an FHA loan that requires 3.5% down and live in 1 unit for several years while the other three tenants pay for your mortgage and bills and hopefully generate you excess cash flow to bank into your next down payment fund.

If you are asking for that to add me to your buyers list, it seems kind of excessive.

Either way, I am providing a solution (shed), but they need to figure out what to do with excess items if the items can't all fit in the shed.

The "excess" suspended losses will pile up on your books and can be used to offset passive gains.

The plan would be to rent out other unit(s) first, then see if any friends/family want to rent out excess beds in my unit.

We were able to get Liability coverage through the excess/surplus market from a specialty carrier. 

That said, if you find yourself doing anything which conflicts with your principles in any way, you may need to re-evaluate REI or your principles or both.What I do find is excessive focus on the money and insufficient focus on the business.In REI we provide safe, secure housing in a way which serves the needs of both the tenant and the owner / landlord.

Regarding the decision to sell vs. rent, as an alternative to selling, did you consider doing a cash-out refinance in order to pull out the equity in excess of what you had into it?

I find that when the coverage is gotten from the excess/specialty markets the coverage is often less and the exclusions more than what you would get in a standard policy.

@Jon Schwartz1) To begin with 3 million FMV in California captures innumerable small business owners standing entirely on its own, but if that weren't bad enough, the valuation standard is actually aggregated across all properties owned so it's not in fact in excess of 3 million per property making it much worse still.2) Commercial properties have a very suspiciously expansive scope in the initiative (the devil is in the details, as is typical, and here as well) thus capturing both mom and pop businesses and in many cases even agriculture.3) Unsurprisingly those proffering the provision have acknowledged it is but a first step, once they get their foot in the door with passage of the initiative they will shoot for full repeal of Prop 13 targeting all real estate owners.4) But you make a really great point, sell it as tax on fat cats (while in reality it's scope will hit many many small businesses) makes it palatable to a largely uninformed electorate and further softens them up for delivery of the really big hammer when they shoot for full repeal of Prop 13.