However, in CA with the annual franchise tax of $800, additional LLCs are relatively expensive.

My other option would be to buy a 2 or 3 bedroom single family and rent the additional bedrooms.

"Caviar seeks to reduce investment volatility (“beta”) while capturing higher than average rates of return (“alpha”).

If you "jack" the rent up (even if you find a tenant willing to pay it), typically the appraiser will not give credit for additional value above and beyond what market rents would determine.

Sure people get notices but they get calls, door knockers and agents in addition to direct mail by the truck loads especially if there is equity. 

In addition to needing a pre-qual, I want to familiarize myself with a hard money lenders' requirements and processes, so I can jump when I need to, now or in the future.Does anyone have any recommendations?

We ended up backing out of the deal cause the additional cost to the deal at that time.  

In addition, you might look at this thread if you are still considering investing there as a counter perspective to what has been posted.Obviously you can make up your own mind.

I don't believe the 5000 sqft factors in even if trying to squeeze in additional units.

I guess it's possible to over bid knowing you are going to reduce the price either thru appraisal or inspection.