If I were starting over in your market, I would 100% focus on house hacking in San Diego.

I had a friend in San Antonio who learned this the hard way.

I own 5 sfr in San Antonio and rent them out with a property manager handling all details. 

Water in San Diego is real expensive.  

Quote from @Elisha Johnston: Quote from @Golan Corshidi: hey Elisha, I live in San Francisco and just bought a triplex and Cleveland for 140k that's cash flowing well.

Hello all, I am an investor based out of San Antonio, TX.

However, it seems my local area (San Jose / Bay Area) might not be the best as I know most of the win is in the buy.

You could also go for a condo: https://www.zillow.com/homedetails/4310-54th-St-APT-109-San-...Again, this is only an example that I found in less than 5 seconds.

Our lot size is 7300 sq ft and main house is 1700+ sq ft.Location: San Jose, CA- We were thinking to potentially design the ADU such that we could have a wall (or a door) that allows us to separate the ADU into a 1 bed/1bath for self use (or rental) and another part which could be rented separately on AirBnB as needed.

Insurance would cover it, I would pay the deductible, and no assets would be lost.If you are in an area like San Diego where people are more likely to sue, a judge is more likely to find you guilty, and the payout is expected to be higher, you may consider an umbrella insurance policy.