If you stay in California, I'd recommend a house-hack of some type.

I personally have 8+ units there in Cleveland and my team primarily helped me to make the managing of these properties easier.

@Bryan GalazI bought my first two houses with a HELOC from my house.

Here's how you can find good deals on properties that might need some work or are priced lower than usual:Connect with People - Make friends with real estate agents, lawyers, and others who know about properties that need to be sold quickly or aren't in great shape.Reach Out Directly - Send letters or use websites to contact property owners who might want to sell fast.Look Around - Drive or walk around neighborhoods to find houses that look like they need fixing up.

If none of the above work, would it be so bad to sell the house? 

Personally, I invest in Memphis, TN for 2 reasons: 1) I believe it is the best market for real estate investors for all the factors mentioned above. 2) I live here and if investing in my own backyard of Memphis is a great idea, why would I go anywhere else?...

This almost seems like a loophole, that I could buy a house which had multiple rooms per unit.

I moved from Portland OR to Columbus OH to start house hacking.

The IRS generally allows deductions for second homes if you use the property for personal use for more than 14 days or 10% of the days it's rented, whichever is greater. 

Make sure you get your name on the deed or have some type of contract so they don't change their mind about the partnership after making the house all nice after the rehab.