This is the best alternate to a stove top kettle.

I think a conversation with the loan officer's manager to see if a compromise/alternative can be worked out may be beneficial. 

Again, I like the idea of a new fourplex, it just seems like you’re glossing over alternatives/possible problems. 1) You say you want to hold for cash flow instead of taking $120k cash by selling as soon as it’s built.

Alternatively the debtor can payoff the note either in full or at a negotiated discount.  

Alternatively i could go for being a real estate broker and try to get experience in actual real estate without putting too much of my own skin in the game.

Alternatively they can purchase a portfolio of occupied homes at a discounted price because the seller of the portfolio in most instances first tried their hand at selling the homes individually to the owner occupant and after experiencing 13-15% in disposition fees and expenses realized its not worth the effort and better to package the assets and sell discounted to another investor.Keep in mind, most of these SFH's are in stagnant markets meaning limited appreciation and if you ever took the time to look at an amortization schedule  there's no meaningful principal paydown for many years.

There could also be a change to the HOA by-laws eliminating the right to lease and alternatively if too many units are tenant occupied it could impact the warrantability of the financing which would be problematic if you wanted to sell the unit.

California's housing prices are too high for our budget, and I'm at a loss.I'm seeking your advice on alternative ways to use these funds for good.

An annuity is definitely a different level of risk exposure than this type of an alternative investment. 

Alternatively, you could explore house hacking with a multifamily duplex, where you live in one unit and rent out the others.