A house for us to live in turned headache, turned into a $105k flip.So my wife and I bought a house, 3BD 2BA with an attached studio, in Aptos, CA in June 2015. 

Too much headache from the association, you don't really own anything, too many rules, etc....

Vacant land has fewer headaches, minimal management.  

Share more figures to convince us it's worth inheriting this two unit headache with low cash flow.

It seems like it comes with headaches but you might be able to get a better deal because other people might not want the headaches.

I feel safer diving into SFH being that I'm a newbie investor but my plans are to purchase a MFH property for the sake of having less headache.

That $160k of cash in equity could be deployed in your new locale on properties that are achieving positive cashflow AND capital gains.To me it's simple, take your profit and make that money WORK for you instead of being a monthly bill (and headache) in an area that is soon to be far away from you.

His biggest headaches are the sporadic turnover of clients.

Hi Aniket,Going from 4 units to 5 units IMO would be a big headache as zoing status changes from residential to commercial.Up to 4 families is still considered residential, once you go to 5 units you are now commercial.

It might be too much (big maintenance headache) for her to manage in which case she would sell it.If she sells the 4plex and buys 1 or more other investment properties, if the total is less than what she makes from selling the 4plex I'm assuming she'll have to pay capital gains on the difference?