I've been shopping 6 months and this is the highest rental income I've seen for my price range (under 350K).The rents seem very low to me.

Keep in mind that this is in San Diego in the $500-600k range that I have seen this so I am not sure how your home will compare. 

What price range will you buy in?

You'll want to keep your good tenants in the property as looooong as possible - cash reserves required by lender for your purchase - you'll want to see how much they require to see the range of property you can afford - overestimating occupancy - if you have a resident move out that's likely a solid 1 1/2 months without rent (depends on market but I'm just using averages) and if you have to evict that's likely 2 months without rent 

Otherwise I would take a 30% discount.I am not sure what price range this is in, but you are going to have to refi in 5 years, if you're overpaying that much the bank may not appraise it high enough for a refi.

I've seen a lot of land around LA that ranges from $15K to $500K.

I know that's not a straight answer, but it does depend on your goals, price range, and risk tolerance.

Decide what size houses you want to buy, age range, # of beds & baths, etc.

That sounds like the answer is stick with the original or go up a small amount that is still in the range you wanted to be in.In my past experience I have had this situation always happen where I have no met the reserve but have been the high bidder.  

Or are we better to keep our eyes peeled for 2 single families in the near $200,000 range?