To me, an analogous question would be - "Is insuring only the exterior of my car sufficient"

Unfortunately, not being able to set rent sufficient to cover costs is a common challenge with properties purchased through a VA loan.

If the amount is sufficient to constitute a down payment (with some reserves) in California, I would strongly consider replicating you late relative's strategy and buying nearby.  

For example I thought 300/unit for insurance annually would be sufficient for a 14 unit, but my insurance quoted me 1k/unit.

I am looking to invest my hard earned pennies out of state in either SFH or Multi with goal of building sufficient cash flow to allow me to leave my current W2 job. 

please help with ideas and insight from the vast amount of knowledge and experience within this group.

You want to be aware of the self-sufficiency rule if you're looking for a 3-4 unit.

Also, if for any reason you change your mind before closing escrow, all you need to do is have the escrow instructions amended and the QI fee portion will be removed (which relatively speaking, is very small).Also, since your parents are looking for steady retirement income, if the worst case scenario happens and you are unable to find anything or if the exchange will not be sufficient, there are alternatives to direct ownership, like a DST which can be used to fill in any gaps.

Now that I've achieved sufficient capital to be self-sustaining, I've significantly de-risked my portfolio into long term equity holdings with no derivative positions.Another general question for everyone: Does leaving my job and no longer having a W2 income harm my ability to get a commercial loan for leverage when purchasing larger MFR properties? 

I also made the mistake when I put in an offer on my River Grove and Elmwood Park properties that I had the sufficient funds to cover the down payment and closing costs, but I did not have any back up emergency reserves in case unexpected expenditures come about.