Either would be a great option; I'd probably choose Roseville because it's more established, but the City of Elk Grove deserves a lot of credit for its impactful growth programs, so it wouldn't be a bad option. 

While finding a local CPA is important, consider the option of working with remote professionals who specialize in real estate and small business taxes.

Or perhaps I am not considering other options, so I am seeking help from this wonderful community.

So it really just comes down to figuring out what solution works for a given market, but it's yet another great thing about real estate: having options!

They should have local options with teams they approve of. 

If I were you keeping the property as 4 units and renting out bonus unit under the radar may be your best option especially if you plan to refi or do HELOC while occupying. 

Just asking as most folks seem to think "giving it back to the lender" is always an option.

However, it will be hard to make the numbers work if you are borrowing 100% of the purchase price.As others have said, house hacking is probably your best option right now.

After 4-5-6 years then maybe roll them up into a small mulitfamily.Another option if you have the credit and some capital is to buy a 4 unit as owner/occupied and live in one and rent the other 3. 

I own Granite and Pine Properties - a Direct to Seller Marketing company that focuses on giving sellers 3 selling options. https://graniteandpinere.com/My advertising is word of mouth, social media, SEO, mailers and cold callers.