It existed way before any of the laws or regulations existed, and it will still exist even after all the laws are removed. 

If you intended to flip but now want to hold, that's one of the major reasons DSCR loans exist.

I'm wondering if such a market exists outside my Pacific Northwest bubble.

Mold for example could be in either category and if you denied a tenancy based on this and somebody decided it was a defect in the unit you could be in trouble.     4)  Another issue is if applicant has roommates they are NOT bringing along to your unit,   and those roommates caused whatever conditions in the existing unit.   

Building on existing land helps eliminate the issue of land scarcity, which is a significant challenge due to California’s high real estate prices.

Finding, As hard as it is to find people willing to sell Subject To their existing financing, they can be found.

For investment properties, 20% down is the realistic minimum these days. 15% down loans exist, but typically are so expensive that they are not practical.

The more impactful thing is the rapidly increasing amount of competition in the form of # of Airbnbs in existence.

When it comes to the HELOC - I'd reach out to any lenders / institutions you have an existing banking relationship with.

Take your time, be wise, and time will reward you.