Reach out using the message system if you have any direct questions or want additional advice.  

I was fine with all these numbers.Then I met with contractors...First, I wanted to add a new bathroom and approximately 450 sq ft of additional living space.

From there, you can research through zillow/redfin whatever but your best bet would be to find an investor/agent (I a one but based in Fort Lauderdale) who can guide you through the process.

My best advice is find a place that has a few rooms with square footage to add additional rooms and an ADU.

Additionally, have a clear budget, factoring in potential repair costs, and ensure you understand the rules about earnest money deposits and closing deadlines.LLC for Real Estate Investing: Forming an LLC for rental properties can offer liability protection and may provide tax advantages, though the tax benefits are non-existence for rentals.

Quote from @Victor Yang:In addition, is it possible for me and my wife to gift 36k worth of equity per year of the house (under the annual exclusion limit) and therefore have none of the costs go towards the lifetime gift limit?

I'd bet on Austin over 30 years, but again, not necessarily relative to SFO. 

Additionally, forming a new LLC may require obtaining a new EIN and business bank account.This post does not create a CPA-Client relationship.

And I could use additional 200K or so to fund my next investment property. 

You can easily find this online but I will message you directly with some additional info.