Had previously been avoiding real estate investment because I wanted the simplicity of passive income gains from stocks.

For instance if he says $20,000 in repairs I’m not that worried and will offer close to where I figured I could offer based on income and expenses.

Based on what you're describing, I think your going-in criteria is definitely something that is strong *however* your goals may not match what current market reality is.When you say $3200/month payment - do you mean $3200/month before or after accounting for potential future rental income from your tenants in the other units? 

SoCal CAP rates do seem to be 5% from the redfin descriptions I read on some of them.I'd much rather buy a 1 million dollar SFH in north county than a 1 million dollar 4 unit in a low income neighborhood. 

Depending on the situation you may find a quad as well that would effectively let you use 75% of the rental income from the 3 units you don't occupy.

You should both read Lend to Live: Earn Hassle-free Passive Income in Real Estate with Private Money Lending.

The 22 yo graduates from college in computer science and says he is working on passive income this summer-wants to code something that earns passive income.

If that is the case you will need to hire a property manager who will likely charge 8-10% of the monthly rental income.

What the benefits for the seller are is that they CAN foreclose almost as easily as a bank if need be; there is a good chance that they can get a better rate on that Note that they will carry (say 5-10%) than what they are likely to get with their equity otherwise; if might help them sell a property that is hard to sell otherwise; and might be advantages income tax wise also.One example is a 4plex that just came online here in our market.

A property bought for $100k that has $10k of "Net Operating Income (NOI)" with ZERO Mortgage has a Cash Flow of $10k annually.The SAME Property, if purchased with a Mortgage that also has an annual payment of $10k means that the cash flow is ZERO for the exact same property.How can you say that Cash Flow is a characteristic of the Property?