I have also seen these percentages applied to highly desirable areas (NW, NC, Far North, & Historic Areas) as well to higher priced flip properties with larger potential net profit.  

So I learn if it was here in California I have relationships with lenders and can get things done.

Since this is a numbers game, the only way you can answer the question is to do the following:Establish a relationship w/ a realtor winning to run some comparables for you showing the potential value if you convert from a 2 flat to a singleIf the values are not significantly hire than your mortgage then hold on to it as a 2 flatIf the values are significantly hire than your mortgage then get some estimates for converting from a 2 flat to a single.  

I have a lot of friends where I invest and a whole slew of contractors that I've built relationships with.  

Much of this business, like any other industry, is about building good relationships. 

I am not afraid of HML given the right scenarios of course and will definitely use it if need be,  but I would like to establish a working relationship with a bank so any info on that area would be much appreciated.  

If you have an existing relationship with a PM company you know that it will be done right and if something is not done right you have somebody to hold accountable.

Over the years we have build a relationship with several lenders who offer non-recourse financing to IRAs and 401(K)s, just sent me a PM and I will get you the list of those lenders. 

Also, build relationships with local realtors and investors you can trust to help you.

This is a great source for business, leads and building relationships.