Gets extremely complicated and tricky, hence in New York, and perhaps San Francisco, attorneys specialize in co op law.

I could go with a local bank or credit union (I'm in San Antonio, so there are plenty to choose from), relying on the benefits of face to face relationship as I build out more real estate business.

Local banks don't seem to want to lend to a out of state investor either (Indy investments and I'm in San Diego). 

As stated Lima one will do construction.. but not sure if they will entertain those with no track record you can ask.Iron Bridge out of Oregon will do these  Conventus out of San Fran will do west coast  on and on.

I'm part of a group that owns 10 commercial buildings in San Diego, CA.

We'll go over the details of your project and the details of our business culture, how we operate to achieve success for both of us.Our areas of operations are (Northern California) Certain Areas of Contra Costa County, San Joaquin County, in some cases Sacramento County.

Do people diversify between single family, multi-family, appreciation investments, cash flow investments,  coastal properties, midwestern properties etc...I am a newb but own a primary residence (in San Diego) and one rental in AZ which are both more appreciation plays and I've been looking at small multi-family and middle America cashflow properties. 

San Diego is a tough market but I would highly recommend buying something cheap so you can do a live in flip and either keep it as a rental when you PCS/ get out or sell it and use the profits to fund your next investment.

The house is in Clairemont, San Diego about 4 miles away from the beach.

2) Or should I use it to try to buy another property in San Diego?