Like I said, this would be my first REI and I really don't want to make a big mistake on a deal, but based on the numbers I've come up with, this property would cash flow about $500 initially while the loans are being paid back, but should generate in the area of $1800 once the loans have been repaid.At this point, I would be willing to take on any positive income, but I'm sure there are factors that play into this that I know nothing about.

If a big expense comes into play, I have two credit cards that are $30k limit each with only 4% Annual interest rate (active duty military).

Everyone has made me glad I joined this site.Would any of you be interested in knowing how this plays out?

You can avoid payroll by ensuring your structure your agreement with them such that they are a 1099 sub contractor NOT an employee (bes ure to get smart and play by all the rules!). 

Could be a good chance to find opportunities that could apply to your real estate investment business in relation to see what the City is demanding and zoning discrepancies that could play to your advantage?

I emailed them both about a week later saying that Linda has every right to move out of the property, however that they are both equally responsible to pay the rent for the duration of the contract.from the pay stubs lisa provided i don't see how she could afford rent on her own if linda does move out, even though she says she can afford it (maybe from baby bonus or help from family). even assuming she can make the payments on her own, i'm not sure on best course of action.since they applied together and one tenant leaves, Lisa may not meet minimum requirements to be approved on her own. should/can I make her re-apply on her own?

This is a long term play that will reward investors for as long as they invest in the area.  

A loud speaker and keep playing the  "Barney " theme song .

This at least keeps the option of selling the property in play.

However, investing in Southern California doesn't make sense to me and it is mostly appreciation plays.