If I was your brother getting my REI portfolio started, is there any advice, strategies, links, literature, articles, or people to follow that you would recommend for someone extremely leery of financial risk?

Verifying last 2 years of rentalhistory and income extremely important to find the “best of the worst”.Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

Obviously land and new construction, specifically FHA construction, is not popular these days so it seems to be extremely difficult to locate anyone with sufficient expertise or specialization in this area.

The process of identifying a quality applicant is extremely difficult now with the amount of fraudulent paystubs, bank statements and IDs.

One particular situation with $700k of debt and $2k/month cash flow may be extremely dangerous and another may be low risk. 

Covered California super sucks, private insurance is extremely expensive & CA fines you at end of year for any lapse in coverage.Employees have no idea how lucky they are, especially here in CA.My workers comp and payroll taxes are almost 18%! 

Im actually also in your camp but maybe not as extreme.  

My initial hunch is that there may be extremely limited options of what can be built, and a likelihood of nothing being allowed. 

The above issues are extremely common with all properties I buy, but what I buy are pre-existing multifamily with some meat on the bone. 

If you have the cost segregation done by a reputable company then even if you get audited, you'll have proper support to back up your deductions.Now whether it's worth it - A cost segregation study can be extremely beneficial but its a case by case basis that depends on a multitude of factors.