Others say it will increase our premiums and we should pay a lawyer to handle it ourselves.

It's all still under consideration for Tyson.

Can that be taken into consideration for the loan?

I have a lot of confidence of on-going short-term rent appreciation (next 5 years) but less confidence of significant on-going property appreciation (I expect a leveling off but am not real confident of any prediction).High end homes (bigger and more expensive) have worse cash flow than middle class or working class homes.Note a small multiplex or your 16+ unit will experience similar rent and property appreciation to your SFR and have better initial cash flow (it will be poor initial cash for San Diego but increase with the rent appreciation).To summarize, SFR are not the best buy n hold investment option in San Diego. 

You would need to take any rehabbing (even if its just lipstick) into consideration as well. 

The current rent is low for the market so there is a potential to increase with total of $300 plus the garage is not rented at the moment which is an extra $150 .I will appreciate any opinion or thoughts!

Floods are just one of the countless risks.Floodplains are not a hard stop for me, but it's definitely something to put into your risk and cost analysis considerations.

If your goal/strategy is to build a nice nest egg for retirement and not replace your current income (not knowing where you are in life), then netting 5% while padding your future isn't that bad of a deal, especially since there are ways you might be able to increase that 5% through property and operational improvements.

Sounds like you could increase your cashflow by 50%.

Some risks I saw come to reality: increasing condo fee, board threatening to pass rental restrictions on units, including on existing landlords/owners.