If not, do you own the primary home you're living in now? 

My wife and I have overhauled our personal budget to reflect the 'pay yourself first' approach (allocate in order: income comes in -> invest -> donate -> fixed expenses -> variable expenses -> fun $$).We are looking to see what experienced people generally recommend for a holding tank for that 'invest' allocation while we target our first real estate deal.What financial vehicles have you guys used that works well for this?

It’s usually best to open a separate business checking account so your rental income and expenses stay organized and away from personal funds.

However, what if you prefer simplicity, limited risk, and are living off of the income? 

Your best route might be to buy a 2 to 4 unit property that you can live in and rent out the additional apartments.

I don't live in CA, and wasn't aware of the Prop 13 passing to the next owner if it's parent to child and both live in it as their primary.

You sell after 12 months and take no depreciation expense in the first year.  

I know of other softwares, like Baselane that handle income and expenses all in one place.

I'm not familiar with California but I know living in Florida, the closer you are to the ocean the more expensive it is to live.

Taxes are the $100, so about $290 a month expenses. $110 a month in cashflow.