(I am not an attorney nor giving legal advice consult an attorney for a legitimate opinion of law).As the person hiring the laborer you need Workers Comp to pay for an injury and lost wages if that worker is injured on the job.

Thank you for your valuable opinions.

We have done well our first 6 months with renting it so I wanted to see some opinions regarding purchasing other homes in the area to rent as vacation rentals.

Instead I would bet there are more resi agents than ever especially if you count wholesalers and other quasi-agents.What it did do, in my opinion, was separate the truly great agents and brokers from everyone else.

I would really love the opinions of everyone willing to give an opinion on my current situation. 

They all seem over priced still (in my opinion)  

Next I would try to find a smaller area within the zip code and then start searching for individual properties.If I can’t find anything in California, I would start looking elsewhere using the same steps.In your opinion, is that a good approach?

It depends on your goals and interests.Your idea of setting up separate bank accounts is a wise one, in my opinion. what isn't clear is whether you plan on kicking out current tenants, or aiming for a multifamily. 

That would be the only way buying something makes sense in my opinion. 

Always proceed with caution since the lender gets origination fees and may not do the best DD in my opinion.