The investors I know finding properties on the MLS are making 30+ offers a week, embarassing offers, in hopes of finding 1 or 2 properties a month.Others are door knocking, cold calling, spending money on mailers to find off market properties.  

This community will offer you so much value - don't be afraid to drop your questions here or reach out to any of the folks above directly.

Be sure you to have offer for potential homesellers to raise their hand... like a Home Seller's Guide.Call expired and ask them how come they think their house didn't sell and listen to what they say. 

At the time, his offer was low, and I had potential plans for that space, so I turned him down.

This will give you one critical piece of information, that it may take X days to get an offer and sell, and the second item will give you what your competition is right now.

Right now, the best offers around me are for some 1.3-4 million, that only generated around 100k per year gross, so there would be a high chance of not cash flowing, and paying money, especially with a commercial loan (these buildings have more than 4 units).I was thinking that although the rental itself does not generate money, I would be able to deduct the mortgage interest, and depreciation from my personal w2 income and would be net positive.

Plus I didn't include the Taxes and insurance for an ADU.IMO, it makes sense if you have the right sized property and a willing to think long-term.

One long-shot option is to offer a lease at something like $1,300. 

In speaking with our insurance agent, we decided not to make an offer.

I assumed this would be the case because the rest of what California has to offer kind of sucks.