I'm currently a music producer but I've been hustling on the real estate end in between gigs here on BP for sure!

I have three options:I can sell to my tenant - most of my tenants are interested in home ownership, eventually.I can sell to an investor - I only rent M2M so I can offer a home that produces income or can be vacant in 30 days notice.I can sell to the open market - most of what I own is SFH, so I have a broad market to advertise my house...I can also sell my home below market (because my purchase price is right) to get out quickly if I need to and still make a considerable profit.Multiple properties may incur higher PROBABILITY of a bad thing happening, but it will yield you a higher PERCENTAGE of return on your investment IF you stick to your investment rules.My largest "contrary to the popular belief" is that I buy not to generate large amounts of cash flow (although each property does @Justin Fox brings up a good point that it isn't just what you have left after you pay PITI), but to keep my equity safe and building as I own and maintain the property. 

I have been pre-approved several times and can produce that type of letter, but cannot produce a bank account full of cash letter to go along with my cash offer.

Everyone knows a fight in court only produces the attorneys as the winners and is actually very costly to the parties paying the bills.

As a example  mulyi unit will produce higher more consistent returns than a SFH. 

For instance If I know a investor who is looking for funds, backed by income producing property.

I wouldn't sell any piece of real estate unless I have already identify a new asset that produces as much more more income and have potential to create new equity or I desperately needed the capital to pay for a tragedy.  

As such, if you are focusing on achieving annual cash flow, places in the mid-west or south tend to produce much higher returns.

I understand that yellow letter campaigns and "riding the roads" can produce wonderful results in large cities.

3) I can't speak for other areas of CA obviously as I stated above having not yet even so much as visited the state - BUT - that same money you are talking about for a down payment on one property in SF could be used in many many other parts of the country to buy handfuls of property or decent sized apartment complexes (20-40 units), which very seriously will produce returns high enough to pay for that 2000$/mo mortgage and then some.