How are landlords in SF handling the security deposit law that requires them to pay interest to residents on their deposits?

However, the ROI on the cheaper house seems kinda low if I rent out the property as a whole.

I am willing to manage it on my own.If I sell, I can put it in an index fund or towards my current primary residence mortgage with an interest rate of 6.125%.

I've always planned on purchasing a bigger multifamily (20+).

My partner rents out her family's vacation home on VRBO. 

The biggest challenge I can see for this is that I hear it's a pain in the *** for the seller to go through a local community bank and confirm their income for their approval for a mortgage, and there are local/community banks that will approve 95-100% LTV loans based on how profitable the deal is.

This is how the rental income is reported on their personal tax return."

Is it better to use that money as a down payment on one property or split it and use it for a down payment on 2 properties?  

Against my better judgement I modified the criteria based on feedback I received and this is not going as expected.

I was hoping that someone could explain this method a little more in detail as I have really only heard the few soundbites on Facebook Reels and whatnot.