We plan to use higher end materials and finishes to cater to buyers in this market, and ideally would find someone with experience building in this town.  

I would recommend you add your down payment, the cost of any materials that will be installed in the home and he cost to demolish and remove the remnants of the home if it is destroyed to the loan amount.

I have come to a point where I have read a decent amount of material but at the same time I feel for me to really learn and feel comfortable in investing I need a more hands on approach.

Perhaps a little higher in LA because the labor cost will be a bit higher, but material cost is roughly equivalent and total cost is not 3x. 

From my internet reading, FHA does mixed used financing with commercial space in the property up to 49%.

Not a bad place to find some great material and to educate yourself!

I've searched all over the internet the last 2 hours, and nothing really talks about what my loan officer is trying to do with in the laws limitation of a mechanics lien.

@Jake Thomas  good points.. when I first started in real estate sales circa 1975.. there was no internet heck there was not even a MLS or a computer on your desk top.. the MLS was a big book.I worked every weekend both days 50 weeks a year.. and I worked 3 to 4 nights during the night.what I did have time though during the day ( because not bogged down on computer or cell phone) was to golf fish other actives that I could do middle of the day.. 

Are you knocking on doors and attempting to speak with the owners, leaving marketing materials at the door, or are you just writing down addresses and sending letters at a later time?  

What amazes me is the number of people coming here for advice that haven't even been willing to put in a ten minute Internet search first.