Fixer upper MFH could be low in inventory but normal ones are still there

2% option money is on the low side. 3% - 5% is more the norm. 

Given that your rental property currently cash flows over $3K/month, the DSCR might be too low to qualify for the full $900K loan, unless you can show additional rental income or strong reserves.If your goal is to access that $200K for another investment, refinancing with a DSCR loan could be worth losing the low 2.99% rate, especially since it would eliminate the high-interest HELOC.

Low inventory, but they exist.

The fact that your mortgage balance is relatively low with a 2.375% interest rate is a solid advantage here.

Interest is low on the house and has a great cash flow, always has been.

Would it better as a California resident to invest my money in a low price area of California due to driving distance and proximity?

Generally, we see this as a good option for high-income earners and low-risk investors 

The low price tag is so tempting, but they just don't appreciate like SFHs, HOA and assessments are frustrating, and loan options are limited depending on the building's owner occupant vs renter population. 

The reality is, it's often a rather easy low-stress pitch.