I already have a property that I'm doing time consuming work on so less work the better. 

As a result me and a few of my industry buddies started this site http://tanklessheaterguide.com/ to help out other consumers and property investors.

If mortgage rates go up that will cause the market to top out in the California market or even if rates dont go up much there will just be fewer buyers than can afford housing because incomes have not gone up as much as prices. 

Do not spend a lot of time on price per square foot, that's more for consumers than professionals.But, to answer your question directly...

Long term, this means we're going to see fewer pockets of high prices and low prices.

Dodd-Frank applies to consumers. 

If they are signed on as "roommates" then do they have much fewer tenant rights on their side as opposed to renting out the top half as a unit? 

A flip can be expensive and time consuming.

Small markets have fewer buyers, so you may have problems reselling it.

It is completely normal for older building to have fewer outlets than this and is acceptable.