You can cash out after 6 months from date of acquisition, but only up to the limited LTV restriction of 50%.

I understand there are sq. foot restrictions based on the loan type.  

Now a historical area on the other hand, with restrictions... this makes me look at what I will have to do and the extra steps I would have to take to do it. 

To me the quadplex would be dual purpose, while you are not living there it serves as a reliable stream of income, once you move there, you could live in 1 of the units while you build your permanent home, and you could also use it for when your family comes over for large gatherings.A 2nd option might be to build an RV park, Unless their are zoning restrictions, you should be able to build one fairly inexpensive, with a septic system and either public water or a well, you can keep your costs to a minimum by doing gravel roads, which are easier to remove later if you don't want them. 

I think if you were sharing walls or in same house, then certain quiet hours in lease or noise restrictions can help prevent some issues. 

Here, you should be obtaining a geotech report and reviewing the title report and the zoning  to verify there are no deed restrictions or zoning overlays. 

The local markets depending on where are talking about or have put in restrictions on STR's.

I’m aware California is not the best market, with the restrictions and potential new tax coming up, etc, but we have personal reasons to invest there.With that said, we visited a lot of houses in the San Diego area and saw 2 that seem like a potential fit for us: one is a smaller 3 bedroom but a mile from the beach and the other is a 15-17min drive to the beach, but bigger with 4 bedroom and a little cheaper, which would allow us some cushion to invest on a hot tub or potential pool.

@John Mason yes, but I am sure some of the condo associations probably do not allow them or there are other restrictions.

I understand the restrictions in the market (and that Napa county in completely restricted) but and am hoping to find an agent with experience specifically in short term rentals in the Sonoma market.