Or you can find a commercial mortgage broker if you're in a larger more competitive metro area. 

As I read these REI books they keep talking about how you can be over leveraged, meaning you have small amount of capital invested into a much larger amount.

There's always the possibility of doing a 1031 into one larger property and starting over on smaller residential rentals.

I also mitigate the additional cost by carrying a larger deductible on the property coverage. 

For example, the desire for larger homes with bigger backyards is causing people to increasingly come to the San Fernando Valley from central L.A and for those already in the Valley to trade up in size.

Vacation rentals can be lucrative but there are few extra things to consider :Larger down payment, higher interest rate,Insurance, and MAINTENANCE.

PNC didn't care and I would stay with larger banks if youre out of state. 

It is already in contract.You will need 6 month's payments in liquidity and about 20% down.

Can these interior cracks be fixed with some drywall compound, a fine-grit sanding sponge, and some sweat equity, OR are these a symptom of larger structural issues?

At the same time I would not discourage you from looking in CA, but you need to put together a larger war chest.Best of luck to you!