this might be somewhat unrelated and I might be a bit of a broken record here but I continue to stress this feedback that I really don't understand why it can't be changed - The financing options/terminology/content is very confusing and poorly defined here on BP - If you look at the financing options of "Find a Lender" and on the website / forums - there are terms and interchangeable content that has to be super confusing to people from a financing perspective - probably at least partially leading to excess questions and request posts - as it is extremely hard for a new or somewhat new investor to clearly understand all the options and numbers..My 2 cents(see below - what is the difference between a "Bridge Loan and "Fix & Flip" loan?

My mental calculus is that I want returns in excess of 25% above what the passive S&P 500 Index has returned historically (~8%).  

No W-2 limits.There is an excess business loss limitation, but that's $578,000 for married filing joint taxpayers.

California charges a minimum tax of $800 a year per LLC, and more if you have gross receipts in excess of $250k.

Given your current straightforward W-2 tax situation, a $5,000 annual fee for a real estate-focused CPA might be excessive. 

I really liked the guy and I don't want to cut him loose, but this is business. 

Why should seller loose so much money?

. - unless you get some whacko judge, there should not be any issue collecting rent on unpermittted unit, having a move-out cost (no fault eviction) in excess of the standard rent control or eviction process in excess of standard rent control hurdles.    

Instead of paying just the minimum on the heloc, I would continue the same monthly payments I was paying on the mortgage but theyd be way over the minimum and the excess would be applied to principal and would accelerate me in paying off my apartment.

When your rental produces a loss in excess of income (AGI) you have a passive loss.