Am I allowable to eject the current tenants? 

If my budget allows a payment of $950/Mo (p&i), I can afford a $200k home at 4%.  

What are the disadvantages (besides no rental income) to buying a "second home" in an HOA that does not allow for rentals? 

The property manager route would teach you the other side of investing and allow you to seem more knowledgable when talking with investors.

I have found a bank that allows you to purchase rental property under your own name, but keeping the rental property under your name doesn’t provide any asset protection!

The property is occupied (would likely try to have it delivered vacant) and I would put down 5% which is the most I could afford and pretty much the lowest traditional mortgage would allow.

In San Jose and per codes I’m allowed to build an accessory Dwelling unit in my backyard.

This is a value add play, which incorporates a bit of a flip strategy, but still allows you to have income while you implement your plan.

Depending on the value of the property & your credit score, there are lenders that will allow for you to keep the property (or transfer it at closing) in an LLC. 

Staying under 4 units allows you the best access to long term financing at attractive rates.