VRs can also increase long term rent as "affordable housing" properties decrease. 

Good morning BPers...Beginning in 2018, the conforming loan limit is set to increase about 6.8% from $424,100.

California has a wacky law where assessed value for property taxes can only increase at a very limited rate (~1%) so most people are locked into property tax rates much lower than their current home values, so this favors purchasing rather than waiting.$4300/month is at the high-end of affordability for me, so seems like the only way I'll be able to purchase a home of the quality/location I want is to liquidate (at least some portion of) my real estate portfolio.

I certainly understand your mindset, however I would go with the 2nd rental property rather than paying off the mortgage right away.You might initially have less cash flow, but rental income should increase while your mortgage payment should only be decreasing (assuming you don't have an adjustable rate mortgage).I also like the idea of having more than 1 rental property because, if each property is cash flowing like they should be, you have more of a financial cushion during periods in which one property is vacant.

We are also assuming the A class area will increase your quality of life as well for obvious reasons.

For the last seven-plus years, experts have been predicting an increase.

You CAN do cash out refi on investment property and you CAN do a HELOC (harder to find a lender).If you buy a house CASH and below apprised value or you do work to increase the appraised value you can get UP TO 80% of the appraised value back out of it.

Adding another meter base and city water meter could increase your cost to build a lot, but lower the monthly expenses. 

If you already own the home you live in, then you can only use a FHA loan for a new property if you:1. are moving because of a work-related transfer2. an increase in family size requires a larger homedirect quote:“FHA will not insure more than one Property as a Principal Residence for any Borrower, except as noted below.

Another option to value the property is to project the NOI  at increased rental rates, but use a higher Cap Rate to discount the fact that you'll need to implement these changes.