And great feedback regarding the research that should go into the income and expense fluctuations over time and property management.

Also, I don't see a great deal of fluctuation between nightly rates for 2 bedrooms and 1 bedrooms. 

Does anybody have any advice on how to analyze the ever fluctuating market in the different areas of Orange County/SoCal?

Zillow is underestimated by most in the market, but if you look at how they figure the value (use over 60 different fluctuating values, including foreclosures, fsbos etc.) then it really is a great free tool to start with

However, property assessment is not done at the rate of market fluctuation, therefor the tax assessment value never keep up with the market value.

problem arise when they don't watch the variance of pricing per quarter or at least every 6 months because many times it fluctuates. what's steaming hot now might be warm within 6 months. you can't go by the national housing market reports and think that it speaks for every city and every subsection around the country. buy and hold investors know this but speculators aren't always aware of it, which results in ugly properties staying ugly, getting uglier.  

Your "pure" cash flow, even your reserves if you wanted, could be in crypto which will leave it subject to market fluctuations. 

@Chad Duncan We just had a similar debate/search in Portland... but with the following cost factors:- cost of land (at least anywhere close-in, where I assume you'd want your plex)- current rates/availability of most Portland builders we've worked with in the past - the currently insane fluctuations (though June certainly looked good/better) in cost of lumber/building materials- current mortgage rates- dead time/holding period between land purchase and permitting/approval/building and eventual occupancy,we decided it was still best to buy rather than build, and are in the process of closing on a 4plex close in.  

The fact that the ratio greatly increases during economic booms (when appreciation is high) and decreases during down times shows that while prices fluctuate greatly overtime rental rates remain relatively consistent.

I wanted to make sure that there weren't loans out there that provide protection to the lender against market fluctuations by requiring that the borrower maintain equity within a certain percentage of the remaining balance on the loan.