This will save me some money in the longer run.

I had no idea such a thing existed.

Conceptually think of house hacking in the NYC metro as a reduction in rent.It all boils down to the numbers, but if the direct property costs (mortgage + insurance + tax + capex/repairs + vacancy) - the income (rental income) is less than your rent, you are effectively saving yourself money, aka "rent saving"I did this in 2014 in Westchester county (different location, different time, different market), but effectively cut my rent in half.Regarding Basit's suggestion, I would follow this ONLY if your cashflow from the other market is greater than the "rent saving" in NYC on a per dollar invested basis.Joe

Lastly, California is very over priced in most cases so keep in mind buying out of state is not hard and can save you a ton of money. 

It's great to find a place where like minded individuals can get together and share thoughts and ideas and I look forward to hearing from you all!

Are either of these workable ideas or should I be looking into pulling equity out of our current rental and going the conventional mortgage route or some other financing option?

And, all commercial loans I've been privy to care much more about the DCSR than the paper value of the thing.Unless you're trying to save your first 4 conforming loans for other purposes, I'd first look at getting separate loans for each property from the same lender who's using conventional FNMA guidelines.

For example, accumulating debt on a wedding is a bad idea.

If that's the case, at what point can you save money on the build?

You only need to put 15% down on each so between $30K to $40K and save the rest of your cash for renovations.