we have a development in this area that should be completed in the next 6 months, 2 units. 

I intend to add a closet to the den and make it a 3 bedroom adding value as well as remodel the entire unit.

5unit is probably manageable.  20 unit is work I would think. 

I went from growing up in a hut in Vietnam and spending my early years in Section 8 housing in the U.S. to now owning four cash-flowing properties (8 units) across three states.

After several weeks the warranty repairman met my sister and looked at the HVAC unit and said there was no leak.

I'd recommend sticking to duplexes and triplexes. 4 units are considered commercial by building standards and have higher scrutiny.

You can 100% use an FHA-203k renovation loan on multi-unit properties up to 4 units. 

As for the areas to target, my goal in getting our feet wet as real estate investors--and since we plan to be living in Sac--is to find a property we can live in while renting out one or more units to help cover our housing expenses, which we can then hold and continue to rent out when we move.

Start with Reonomy or Costar to identify all the 100+ units in your target market (on and off market) and then see if you can get into direct contact with some owners.

If you make the purchase prices much closer, then the waterfront unit should do better.You are going to have to run the numbers.