Also read Brandon Turners book as he describes a lot about money partnerships that may help generate some ideas.

If you have the borrower's SS# and loan #, that may be enough to generate the payoff demand.If the senior lien goes into foreclosure (after the notice of default is filed), I find the foreclosing trustee services to be better (and faster) than the lender at dealing with successors-in-interest.  

Once you have a good feel for the area how do you go about pinning down the areas that you think could potentially generate the most leads or have the best deals?

The older generations did not have computers, cell phones, financial calculators, ...etc, but they had a lot of common practical sense and deeper understanding of life matters.

Not all violations are dead serious, advertising to make loans by an unregistered lender is a violation, but that is enforced on a random basis, find someone to make an example of pretty much. 

However, the fact I'm not dependent on the income from REI at this point means I can establish higher thresholds for required returns than someone who may simply have to have income of some kind being generated.  

Those type of horrible random events WOULD NEVER happen to you because you are a good responsible person and you care a lot.A more intelligent argument would be:  I'm a good landlord so my pot odds are so low of successfully being sued that I don't want to bother with the cost and hassle of forming a LLC. 

I have to say, I'm surprised you didn't take @Rick Harmon up on his offer to personally review the details of your deal... this wasn't an offer from just a random poster, but from a very seasoned investor who specializes in California probate.

I am looking to do some flipping first to generate some cash flow to be able to buy and rent several properties at once.

We love it here in California, but do not think it's appropriate to buy here, since I could get multiple income generating properties for the amount I would need to purchase our primary residence here.