These facts have forced me to look hard at investment strategies and formulate possible alternatives.

Next is having insurance, a million dollar liability policy will usually cover about everything, perhaps 5 million would take care of you sending aliens down sucking tenants up into a space ship, I know, it's unlikely.Next, something PMs here will certainly cringe about, have a good Hold Harmless and Indemnification Agreement with the PM for their acts or omissions in connection with their duties, so long as you have insurance if force.

A tenant is not forced to sue a management company if there is an issue - they can sue the property owner directly.

What we would want to do is figure out if the previous Mortgagee (Lender) had "Lender Placed Insurance" or "Forced Place Insurance" on the Subject Property during the event when the property burnt or became damaged.  

I feel like the CA FTB is forcing me to break my promise. 

So you really need to do something to force appreciation (e.g., buy an empty junker, fix it up, fill it up, then refi) or patiently wait for enough appreciation to make it work dealing with the refi costs.

I have essentially had my hand forced into starting my "investing".

Definitely need to move forward on the lease violation and force them to either remove the animals (which won't happen), move out, or be evicted. 

Trying to find a magic one size fits all formula or shortcut, and using it, is why many investors fail, and are then forced to overestimate on the side of caution, which rejects good deals, and screws up bad ones, still  misses the mark, and then they will criticize or call out those that are actually accurate...because accuracy can't be done.  

If you bring a rehabber and he smells you don't know your numbers he will capitalize on it and dominate the negotiation - you can bet on it and you almost force him to it.