If you buy an asset that is in high demand, that demand couples with a low supply will push the price of that asset up, whatever the asset is.  

If it is in a high demand area of the metro...chances are you will make more money owning this property over the long term than what you will make redeploying the capital to some place else.

I would recommend renting them out slightly below market in order to create a high enough demand that you can be picky with your potential renters. 

That is the price you pay for investing in a market with high demand and limited supply, but those same dynamics cut both ways ... that which is difficult to buy is easy to sell or rent and will tend to go up in value over time if the fundamentals that created the high demand and limited supply are consistent (which they are in CA).

I am obviously not giving in to his demand of sending him a deed without receiving a mortgage and promissory note.

Only sign a one year lease with your tenants, this allows you to increase rent as well as cancel your contract with your current Mgmt co if you feel like you need a change but do not have a strong enough reason to cancel the contract mid lease.For the past 13 years I've managed 3 rental properties or paid someone to manage them when my new duty station was to demanding with deployments.  

All by myself - one man show, while working in a 50-hour demanding full time job. 

It's always the buyers market at the end of the day - builders can and do make more houses to balance out increases in demand. 

The area around the Navy there should be a continual demand area with potential build up of military and should help you sell.There will always be unexpected expenses. 

Make sure there is sufficient market demand for an additional facility.