With a portfolio loan this may be difficult, you can try to get them to lower the contract price by 700 or establish a repair escrow at the time of closing to ease your portfolio lenders nerves. 

I'm sure there are state specific laws, particularly since CA seems to have regulations on everything. 

Even though these will clearly be accredited investors that dos not mean there are no hoops to jump through or regulations to follow.

My simple encouragement would be to work on establishing relationships with folks that can help guide you.

We preach establishing your team first before purchase.

I look for partner splits, health issues, divorce, owner wants to retire, owner needs to focus attention on larger properties they own not doing well, death, etc.The business is established a long time and the good price is coming from the sellers need and NOT that the business isn't sound or it's taking a dive.

I've been administering 1031 Exchanges for 30 years, and I can tell you that an individual can't just read the code, regulations and 100's of rulings and become an expert overnight. 

Once this is established and we have built up another downpayment, we hope to continue investing in buy and hold properties.Any sage advice for newbies?

Do not be misguiding by other investors that say "why pay a commission"Your paying for an expert no matter how much you think you know we're apart of a regulated industry and a lot of information is available to us not you.

When they screen them they ask identifying information, and then a few basic questions to try and establish motivation from the seller, and find out the equity in the property.