The property is a full rehab, possibly more, and originally had restrictions from Freddie Mac requiring buyers to live in the home for at least a year, so I initially passed on it.

This is most of the depreciation you are taking year one.You can calculate your depreciation recapture by taking the sale price of the asset and subtracting the adjusted cost basis.The adjusted cost basis is what you paid for the asset plus any improvements you made along the way minus the depreciation you took along the way.The profit above this original cost is taxed as a capital gain, but the part linked to depreciation is taxed at a maximum rate of 25% under the unrecaptured gains of section 1250.To recap the tax rates are:- Sec. 1250 real property: 25%- Sec. 1245 property and 15 year 1250 property: Ordinary Tax RatesThere are ways to minimize depreciation recapture especially if you know how to work smart with your CPA.1) Asset Valuation at Time of Sale - Sellers can minimize recapture by reallocating the price of the assets on sale.

I also recommend you provide two sets for signature, so that both borrower and lender get signed originals.2.

And I think I've ruled out my original option #1, which was to sink all the proceeds from sale of my current house into next primary residence in Southern California. 

Online, I actually don’t remember the original site I was on-one of the big ones which led me to a desert land site where one woman who owned a lot of San Bernadino land was selling.

Originally posted by @Gary R Uren:No, just on the rental contract. 

Have setbacks changed since the property was originally subdivided?

Originally posted by @Tim Nelson:Thanks for the details @Jason Taliaferro.

Just remember to factor in that you will now have fixed monthly payments on the original three which will reduce your cash flow.

As a quick backstory, I'm originally from MD and graduated from UNC Wilmington.