Unfortunately, the previous owners used the same lease for this garage space as they used for the residential units. 

Know this:  the #1 reason why landlords fail according to the American Apartment Owners' Association is failure to manage to the lease. 

for me  a handful since early 80s  now in those days I was ONLY buying land that had owner contracts on them. 

My proposal is to do the following:1) Create an LLC in which my partner and I are both owners/operators2) Have the title of the property put into the name of the LLC via quitclaim deed3) Have the Operating Agreement of the LLC outline ownership based on shares ownership model.

It looks like according to the county site (sbcounty.gov) they require all renter payment go to the active owner. 

Honestly, I've given up on finding cashflow anywhere close to the city due to rates and prices, BUT some other opportunities you may want to consider are:Live in flip - mentioned earlier in this thread, always a solid option in any market.Condo conversions - good money to be made from this and since they're a little trickier than a traditional flip there tends to be more inventory available that would allow for a profit.ADUs - come February 2nd, ADUs are allowed BY RIGHT on any SF property in the state, owner occupied or not.

If you were to buy direct from the owner you will get great deals!

Pricing - If you cannot check your competitions price and adjust yours daily you may want pricing software (PriceLabs probably best for single listing owners/operators). 

from those I know the way they got going was to buy a 4 plex when it went up in value sell and buy an 8 when it went up sell buy a 16  then a 40 then 100 extra and you need no partners.. you grow it organically. however of course this is not pay 40k and your instantly an apartment owner..

I've built relationships with property managers who have distressed properties in their portfolios that can communicate directly to owners.