And make sure to account for the following expenses:1) Mortgage2) Mortgage insurance (PMI or MIP) or FHA Risk base3) Property Taxes4) City Taxes5) HOA (Home Owner’s Association) Dues and Fees and Assessments6) Insurance   a) Property Hazard Insurance (0.3-0.45%)   b) Flood Insurance   c) Earthquake Insurance   d) Umbrella Insurance7) Vacancy Rate (usually 8% - the equivalent to one month a year, or 5-6% if multifamily and/or if experienced, if not use 8%)8) Utilities (you’ll have these if your tenant is not covering them and/or during vacancy)   a) Water § Sewer § Garbage   b) Electricity   c) Natural Gas   d) Propane9) General Maintenance (usually 5%)   a) Upkeep § Landscaping   b) Snow removal   c) Repairs   d) New Appliances   e) Make ready10) Capital Expenditures (usually 5%, higher is the property is old and obsolete, less if fully rehabbed and all mechanicals and roof are new)11) Property Management (8%, even if you self manage, your time still has value and there might be a time when you'll want to be completely hands off or you'll not be able to do it, vacation, retirement, etc.), including...  

In California we have earthquake insurance but personally I dont know anyone that has ever opted to get it considering how expensive it can be.

You live in CA so earthquakes are a risk there.

“If there is a major event, an earthquake, how do you manage the smart contract?

Nowhere is safe from Mother Nature, every place has some exposure to risk from natural disasters (Midwest has tornados, the west has wildfires, volcanos, earthquakes, east coast has hurricanes, etc.).

For now, I'm starting off back in my hometown (where there definitely aren't any earthquakes).

I'm not convinced you would do that much better in the midwest all said and done.Really, the only risk I see is an earthquake.

We're not in an earthquake zone, but could that still fall on someone?  

Tornados/earthquakes?

If the property values in your market soften, if the tenant moves in and destroys it, fire, earthquakes, floods, hail, hurricane, another lock down requires you to keep a non-paying tenant - honestly anything - and my position in the property is at jeopardy.