San Diego passes a lot of dumb 'blue' type laws (like you can't use section 8 as a factor when looking to rent to someone. 

With self-directed IRA the sky is the limit.Of course you must be aware of the IRS prohibited transactions and be sure to stay away from those:https://www.irs.gov/retirement-plans/plan-particip...Selecting appropriate investment option depends on many different factors such as your age and investment horizon, your risk tolerance, investment experience, etc.

My main concern is rent.

Other things you need to factor in: utilities like satellite TV/internet (which, since the house probably doesn't have access to cable, internet can be An Issue), and will the HOAs allow short-term rentals?  

In this economy I would recommend Fix and Flip Quick Flip and the main difference of those two is making any repairs/rehab. 

It's ~2hrs away, so I'm not sure whether hiring a mgmt company is the correct choice in that scenario or not.Cashflow would be nice, obviously, but that's not my main goal.

Guess it doesn't hurt, but I thought that was something we only factor in for 5 or more.  

I'm hosting and often bring my lawyer's perspective with me to the conversations.We do "Best Deals" and worst deals (we call them "Bad Beats") episodes, and some contract forensics/deal post-mortem episodes as well.The main idea is to learn from both successes and failures.

@James LeeHow much cashflow you’re willing to take should have your expected appreciation playing a big factor, no matter what it is

The downtown is comprised mainly of smaller commercial buildings with mix use of restaurants/store fronts and residential apartments.