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. 

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.

I am also a software engineer though, and understand its features and limitations.

Hey Jimmy,2x Los Angeles house hacker here (and a case study in the BP book, The House Hacking Strategy).In terms of age, it can make a difference but it comes down to what work has been done.

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.   

The annual rent increase is limited to 3.5% a year, however this year, we've spent about 35k in new siding for the building, a new floor for her apartment, a new fan, new stove and hood. 

If it's because of the tenants, you now have limited visibility on it and difficulty with tenants.

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