We'll be paying for the first half of the build via a HELOC on our primary residence.

Despite economic fluctuations, the fundamental need for residences, whether for living or investment purposes, continues to drive the market forward.

With a strong interest in the field, I’m here to dive deep into real estate investment, aiming to grow and learn from this community’s vast experiences.Currently residing in the Bay Area, I’m fascinated by the dynamism of our local market but am equally interested in exploring investment opportunities beyond, including other cities and states.

@Chris Combado, Publication 523 from the IRS lays out the requirements to extend that window for selling your primary residence. 

It's best to start in your own backyard, but if your immediate area has less than 400,000 residents, then consider going to a virtual market- Connect with as many agents, contractors, property managers, attorneys, and title companies as you can.

Losses don't offset W2 income unless you can qualify as a RE professional.

This becomes an issue of cocern in higher priced properties with larger seconds, but if your loan is less than the lot value, you're probably in a much better position.Another issue that could apply to you is the recent CA investor requirements and being a qualified investor.

I don't have the links to back it up, but I remember reading that a multi family doesn't count as an owner occupied resident that you can STR.

If you do not currently own a primary residence and are renting, all the more reason to pursue this investment strategy. 

That said, in the one in a million chance existed for you to assume one, no you don't have to be current with no lates for 24 months but, you would have to qualify.