There are some you can get for quite inexpensive (under 60k) and wither renovate or rent as is. 

For example, if I have a rental that collects $1,000/month, payout $500 in expenses, then another $250 to the contractor (keeping $250 as profit)...is the $250 paid to the contractor considered an expense and fully deductible as a write-off?

Norwood has a few inexpensive, large houses still not renovated. 

.$746.00 expenses, and $795.00 rent.Once 10% vacancy is figured in, expenses are $826.00, rent $795.00- $31.00 negative.Rob

What ways would you recommend for new investors to get started in expensive markets like southern CA?

You need to get an education, but you need to find an inexpensive school to go to to do that.

Otherwise, I'd likely pass along any increase in expenses to the tenant(s).If a commercial property (5+ units), I'd probably do a check of area rents and see where they are versus where my units are.

House hacking works in most markets but especially well in expensive markets like California and Miami

If that were rented, my gross rents would have been $319,006, and maybe a little more in expenses on the commercial property, but not $45,000 worth.So if you are saying that the 50% rule is a maximum, I would tend to agree.

Best of luck in the search, between HouseHacking, STR, and BRRRR / DADU's there are a lot of great strategies that work in expensive coastal markets like California and LA.