I’m currently targeting properties in the $200K–$500K range, depending on the location and potential cash flow.

Aim for $500/mo min and even that won't allow you to tap into unless that's after cap ex, management, vacancy is factored in.

Just factor the cost into the rent.

@Robert Quiroz I think all of the factors you have listed might contribute.So I’m not going to comment on that but I am going to comment on an assumption you made.If 85% of rents are below market on deals you underwrite then those contract rents are probably THE market rent.You can’t just go based upon area median income to rent ratio.First off urban areas are oftentimes street by street, block by block.

But that is calculated after expenses and depreciation is factored in. 

Are you looking for more SFR in the same price range in your local market?

Flipping a brand new home likely wouldn’t bring much profit - especially after having to close twice when you first buy it, and later sell it.Maybe you have millions to spend and I’m just missing the big picture… but when I think of “income” I’m usually thinking “net income” after you factor in expenses, like purchase price or building costs?  

It's just not the reality.I don't know your wife's income so it's hard to know what you need to replace in order to let her retire but if you think you'll get her retired in the next year or 2....you will have a 99% chance of being let down.Becoming financially free, or not needing a 2 income household comes down to 2 simple factors.

I'm in a couple of funds so the range is 10-12%.  

One thing to consider is that in terms of wealth building and Kiyosaki's Cashflow Quadrant, owing a rental and doing work yourself is putting you in the self-employed quadrant, not Business Owner or Investor.I think there are a lot of factors stacked against California for long term rentals, and I think you know it too!