Personally, I think even at our forever home we would like to have an in-laws suite, separated basement, or an ADU of some sort to house our parents. 

I did a pretty conclusive poll of about 14 lenders of all sorts and each and every one wouldn't allow larger loans for operating STRs.

It may be worth looking into getting some sort of partner that has greater access to credit or loan ability.

But let’s talk about the worst-case scenario you’re worried about.

What you are calling 'cash flow" is actually capx or repairs of some sort.

Buy or inherit and hold all their lives while working the properties for income.I've seen teachers, firemen, software engineers and all sorts of people utilize both strategies successfully.

Cali, probably in the worst state to rent as far as tenant laws so of course you do need to be cautious.

Exit strategy on the hard money is either refinance or (worst case) sell. 

Owner occupants have access to all sorts of loan types and programs that investors do not.

Let them sort it out amongst themselves.