For example, the iconic Malibu waterfront homes were built directly over the water, many by variance, and assumedly will not be permitted to reconstruct, certainly not with the same materials or attached architecture.

That actually is a benefit, as no one is expected to water the yard.  

I had to drop a rental by about 10% and an apartment building I'm invested in that we were helping to lease up we had to drop 25%.

@Alecia Loveless is correct--tenants need access 24/7 to their electric service panel, water and heat, assuming those are individual utilities for each unit. 

With that in mind, you'd also have to make sure the land you'd buy has water and electric running to it already.

While we were onboarding the property to the system and trying to figure out the automated sprinklers, he was out there every day watering the lawn by hand, stopping the buck and taking personal responsibility. 

That's easy compared to trying to fight and erroneous $13k water bill (a real issue we had) or an insurance policy tripling (that too).

(And I would tell you to not buy a property that doesn't cash flow unless you have significant resources behind you that could absorb anything that could come at you - like replacing a $5,000 AC one month followed by replacing a $1,000 hot water heater the next).   

We didn't buy much from the MLS and if we did, it was either a "handyman special" or it had been on the market 180+ days with a motivated seller willing to take less than market value.This will be the "new normal" going forward and a lot of newer investors will drop out of the acquisition market and just hold what they have.

Maybe the P trap under the sink is not filling with water correctly and allowing sewer gas to come back in.