Low property taxes, landlord friendly, weather is reasonable, close to Lake Tahoe and lots of enjoyable areas in CA, strong appreciation, strong rents, population growth, diversified job growth, limited land allows for significant appreciation outlook over time. 

With limited rent growth:$5,000/$300 ≈ 17 properties.What if you buy in a city with 8%/yr rent growth?

Most locations have a limit for small claims court.

Exculpation/Limitation on Damages Clause.

If there is no problem then the HELOC will provide more flexibility since the cash out re-fi may yield more proceeds after improvements when applying the 70 or 80% LTV limit whereas you might get improvement proceeds from an investment loan but you won't want to because there will be a lot of red tape, inspections, draws, lien waiver compliance and a lot of other crap they load onto improvement loans on investment property.

I was wondering if there are any limitations to getting a 2nd FHA loan as far as what value the 2nd house is compared to the first one.

Again though this was a business not investors who are starting their journey with limited funds or credit etc.

If there is limited parking, make it clear how many spaces each unit has, and where they are able to park. 

I thought by dividing the property and putting ownership in separate LLCs it would limit my exposures and liability.   

Lenders will require 5% down and you will need to meet the conforming loan limits (not high balance unfortunately).