My assumption is I'll need to invest out of this area, as cap rates around Palo Alto are very low.

The trust rates range from 15% on the low end to 39.6% on the high end.  

To affirm what the others are saying, you are going to need low interest loans to make the BRRRR strategy work.

We followed his lead, even joining a 100% commission, very low support brokerage in exchange for him promising my wife and I that we’d achieve a Keller Williams level support from him, without the painful commission split.

@Josh Carr, Thank you very much for great details... few more questions...Once we win auction deed, we need to manage properties like insurance, maintenance?

It's too small for professional multifamily management and the SFR managers have a different business model, without multifamily vendors and suppliers for turns and maintenance.  

One person will deal with tenets, renovations and maintenance.

Is the rent covering the taxes and insurance as well as the maintenance?

If it's a rather low end neighborhood, I wouldn't put that kind of money into it (although I probably would try to open the kitchen up a bit, that is always a big bonus).

I must put 15% down which takes the loan to low to get a 30 year mortgage.