I understand that the law in CA limiting landlords to a max of one month's deposit went into effect on July 1.

Communication has been a major issue, and I'm finding it difficult to get timely updates or clear answers from them.Given these challenges, I am losing faith in their ability to manage the property effectively and am seriously considering switching to a new property manager.Has anyone experienced similar issues?

Next, figure out how much the entire rehab will cost and contrast it with the possible rental income.

As long as this 4plex would be in a high-cost area then conventional would still be a possibility for you. 

In this case I would say that for maintenance, you would be best off paying per trip/hourly for the cost of any repairs at whatever is an average median rate for a repair man in your area.

And as the buyer (my colleague) is now getting closer to closing it's starting to look like it might be worth just cleaning the place out and doing a very low cost rehab (paint, pressure wash and handyman repairs) for a quick sale.

So if it is 10 years (making up a number) and the unit was 2 years old and a new unit costs $5000, you bill them for 80% of the cost-$4000. 

renter sucked...didnt pay.... cost me a lot of money blah blah blah.

This leaves us with a little over $1000/month for our housing costs split between my wife and I. 

So you will have to consider all these things and their costs, along with any other renovations you will need to make for your potential property, and the prices that go with those as well.