They have a first mortgage with a current balance of 150k.

I am thinking about 1031 exchange to a Multifamily unit hopefully closer to San Francisco proper.

Since it is an FHA, there probably will not be much they can do because the FHA mortgage is very particular on proper terms. 

The other financed properties reserves amount must be determined by applying a specific percentage to the aggregate of the outstanding unpaid principal balance (UFB) for mortgages and HELOCs on these other financed properties.

The reason for the speed of renting out is two-fold:First, this is our first time renting out any property and want to learn the proper way while not rushing ourselves into something that we have to learn the hard way later. 

I do plan on having a proper office and hire a few employees (3-5).

I can recommend a couple of folks for you...Balanced Inspections (http://balancedinspections.com/)are a great company with tons of experience.

If you dont have a bookkeeper, it is your duty to properly track all the income and expense so that the income can be allocated to each property and eventually to each state. 

I guess my main reason for holding back is not knowing how to properly assess deals and crunch the numbers.

I always allow for 3-5 days of vacancy because I need time to properly inspect, arrange for cleaning and repairs, etc.