They look nice, and they'll last decently well, but any water and it deteriorates way faster.

Because you live they are in CA you’re going to get hosed.

The property already had septic, water, and electricity from a home that had been demolished.

I think they recently had their AC and water heater changed without even being present.

The site already has power and city water.  

I had repainted the floors felt with hot water heaters and broken hvac systems. 

I would prioritize the drainage issue above all else, If the garage is still usable for the time being I would leave it be for now and try and do it in between renters, that way you can actually potentially profit from it. 

.- Monthly cash flow from day one- More properties that are fully separated metered -- gas, electric, hot water all metered for individual units- Significant increase in property management -- evictions, late rent not because somebody simply forgot to press "send," potential domestic issues, issues between tenants, etc.

I agree, properties near the water appreciate well as more people like to be close to the beach.

Remember that a broken hot water heater costs about the same to replace no mater what your rent is.