I'm just not sure what the best approach is with our current primary residence as we are new to real estate investing.

I tend to like the type of rehab rule approach better. 

The best thing you can do to protect yourself is to have the basement tested for mold by a company that does only mold testing and not an abatement company.At the same time, you can send your tenant a letter warning them that they will be liable for mold testing if no harmful mold is found and you will pay for testing if any harmful mold is found.The very next thing we do is; send your tenant a certified letter telling them that if they suspect their health is at risk for any reason that relates to their rental unit then your tenant should not reside in your unit for one more minute and should move to a place they feel is safe because you will not assume liability for exacerbating their health issues, if any health issue in regards to mold exists.At this stage, all communications must be in writing and well-thought before communicating.Your situation has happened to us several times and we had a tenant who lived in a brand new unit for only 10 days and he told us he was vomiting and had nose bleeds that resulted from mold.

If you want to finance the property, it would most likely be a bridge loan through a Hard money lender (12-24 months, 20-25 yr amt, 8%-12% rate, PPP).If you choose to close all cash, you may be able to fill in the apartments and negotiate better financing terms than the hard money, backed with several months showing a healthy cash flow and signed leases.Upon stabilization, you'd be able to refinance to a long-term loan with better financing terms.Hope this helps

Talk to the city planning division before you approach the council and see if you can do a public records request to obtain the property’s permit history. 

I would like to work my local market in California but what sellers ask for doesn't seem to leave me with any working deals and working direct to sellers/buyers out of state has its limitations.Would you advise to persevere in California working direct with parties or taking the virtual approach in a different market?

I mention this as an example to make sure you have a very healthy margin in all deals , measured in real dollar profit and not percentage return.

They should also be aware that you will direct the downstairs tenant to approach them about noise complaints and you expect their cooperation.Downstairs tenant - they are below someone else which means they will hear foot steps and thumps as things are moved around.

You'll hear some of the larger folks with multiple properties chime in that this approach isn't scalable. 

So far, I've tried the "spray and pray" approach reaching out to a handful of lenders and have not had much luck yet.