Freddie has similar intricacies, but also does not require a two year history of receipt; https://guide.freddiemac.com/app/guide/section/5306.4If you can use the rental income to drive the DTI down so that you can reduce the down payment similar to that of the FHA product, the benefits of the conventional option will outweigh the FHA option, as I'm assuming you have a strong FICO based on rate quoted with no points.  

They realize the due on sale clause could get exercised and believe the risk is justified by the reduced rate.

Been paid for years on time without capital calls, or any issues, etc and they reduce my taxes through some tax incentive structure with their legal team.. but the key element is the liquidity and the fund is fully diversified with California properties as well as several other states, they do flips as well as buy and hold and also diversify by type of property as in residential luxury and commercial mix use.

Ok, if it's still sounding do-able, the next issue is that section 179 can't be used to create a business loss, so it would only reduce your taxes for the year if your rentals are operating as a taxable gain (but rentals are often at a tax loss thanks to depreciation).  

It’s still a worthy strategy to force cash flow that’s rare to find in SoCal, especially if you can reduce the cost of construction by doing a conversion/using an ADU grant or even buying a property with an existing ADU In general, even if the ADU valuation matches your cost including grants, they are usually not worth it in southern CA in single family zones. 

Using a 401(k) loan reduces your emergency liquidity, which could make the investment riskier if unexpected costs arise.

 $9k/$72500=12.4% Rate of return (not including any closing costs which would reduce this return).  

If you think about it in any industry less transparency and more friction in the transaction will increase fees/commission vs reducing them.I like the idea as an investor of having different agents, a team of agents maybe 3-4 bringing me deals, but I think less of that will happen now as all will have to have you sign some kind of agreement up front. 

And all of this happens during the contract period reducing purchasing risk.Great strategy especially when practiced just on the outskirts of a major metro area in a country setting(a weekend getaway property that can be marketed to city folk).  

High probability that you’ll uncover an oh-$**** issue that will reduce or eliminate your projected profit.