Why not test the market by putting the lots up for sale, and if nobody bites, that might provide your answer. 

Retaining your current home at a 2.875% mortgage rate maximizes cash flow, while accessing $65K in equity provides liquidity for your next steps.

This gives much better diversification protection across geographies, asset types, strategies, investment subclasses etc. versus putting all the eggs into one basket.The downside is that it's not for everyone, and a person has to be comfortable with turning over control to someone else.

Some level of protection will almost certainly be provided as opposed to some sort of outright ban.  

This provides you protection and gives the lender a clear exit strategy,.

The reality is the opposite - if it's not in writing then the PMC doesn't have to provide the service or can charge extra for it!

Are you looking for steady, low-risk passive income now, or are you comfortable taking on more leverage to scale faster?

Ultimately, it's up to you and your personal comfort.

As far as benefit to the seller goes, @Matthew Paul I think you are probably right on the money and regardless of whether they would have preferred to stay in this house rather than move, it is likely providing them some excellent cash flow; and I'd be hard-pressed to come up with a deal that serves both parties better than the current situation. 

With that being said, if you're comfortable with a long term hold, San Diego and especially coastal, will always be attractive imo.