I would like to get them all out and get a nice family to rent it and raise the rent.

Also, looking for great books to read on the topic of real estate investing, particularly in the areas of deal finding and raising capital, would love recommendations.  

If you raise your mortgage balance, then you will pay a higher amount.

I was getting bombarded with emails when it listed for $2,600 initially so I raised the price to $2,800 as I realized I had under priced it.

If it is simpler to simply raise the rent amount to cover the water and continue to manage that bill, that may be an equally acceptable option.It wasn't clear to me based on your post if you transitioned the tenants to your own lease or if you are simply using the previous owners lease agreement.

What is the best way to raise capital in So Cal in order to flip a house?

Let’s do some huge things and raise standards. 

Here are a few that come to mind besides Bigger Pockets podcast and books (which are great too):-Wheelbarrow Profits podcast, Lifetime Cashflow podcast, The ABCs of Real Estate Investing by Ken McElroy, Raising Private Capital by Matt Faircloth, The Millionaire Real Estate Investor by Gary Keller.There are so many more but these all gave me a great framework to work with. 

You can also raise rents if the property you purchase as M2M tenants, no leases.

Hey @Mandela Muhammad ,You raised a great topic here.