One option is to pay down any existing debts (credit cards, car loans, etc.) to free up income capacity.

Another option is to hire independent inspectors or even handymen whom you can pay a flat fee for every time they inspect your house.

Calling - and then there's this option.

My question is should I keep working with this small local bank, is this a good deal, can I get a better deal, what are my other options for scaling as a small real estate investor.

Lenders also have interest only options that could help with cashflow especially on acquisitions to allow you to get the listing up, and have your listing gain momentum (some listings start off slow while they accrue bookings, reviews, etc.)

I am in California.Cash for keys is always an option.

The best asset protection is hiding your assets; second best is hiding your ownership identity behind numerous entities3.

What are my options now?

Definitely look into HELOC/cash out options, but if those don't work in terms of rates or availability I'd suggest using the existing cashflow from your multi to offset a primary mortgage, and then find a primary with an ADU.

Once you get a flavor for lending options you should run a proforma and determine how much return the project will be able to generate on its's own and how much return will be left for LP investors if you go the syndication route.