Maybe you need the cash flow as well and aren't ready for cash neutral investments that focus on wealth accumulation only.You may also need to self manage and self maintain your properties. 

That property will be cash flow neutral at best after factoring in expenses and slightly cash flow negative is more likely.

I did this once with someone I knew and it went well. the house turned out far from beige and neutral and she loved it.  

Right now will be cash flow neutral. 

Warm neutral colors really improve a place.  

Let's assume a neutral housing market, where the $100k is a fair long-term value: not a hot sell at a cyclical peak nor a stinker at the lows.How much could Jane expect to earn in the long term by keeping the property as a rental in option (2)?

Also, as a followup question on why I was confused, I had conceptually always thought  that an expensive California property that may be cash flow neutral pre-tax would be cash flow positive post-tax deductions. 

Just be sure to say builders grade which is not any custon work ..formica counter tops , plain porcelain title , prefab cabinets, laminate floring , neutral colors ... you get the idea .. one why to really increase your profits on rehabs is to have a contractor do the major repairs and you or a handyman tackle the easy stuff .. laminate floors can be quite easy to install if your floors are level and trim is not installed yet .. painting can be done by a handyman ..tile work can be done also ..in some cases and some states these need to be done by a licensed contractor and permits need to be pulled .. it is different by each state .. if i saw that house with those pics, i would think your looking at at least $75-100k in rehab ( taking into consideration of Ca. higher construction costs ) it looks more like $35-50 in rehab here in Fl.

An ocean view is even more of a neutral luxury, adding no real value or comfort to your unit.

Paint color will most likely be some sort of a neutral gray on the walls with white trim and ceilings.