I recently made an offer at ~46% of the original asking price, and wound up buying it for ~63% with some extra land thrown in - after the owner countered my first offer by raising his asking price.And find off-market deals - the MLS is tough, especially right now.

Where you can charge extra to provide water.

Take the extra cash and see if you can build a MF.  

CA law carries very little weight as precedent in my state.

I just operate above board and carry good liability protection.  

Eventually they will come back up, and some of the folks that refinanced to an ARM may not be able to cover the difference, so some of the extra cash that's in the market may dry up as well.

We have already talked to our mortgage broker and we can carry both properties.Does any of this sound impractical, or is there something I am missing that would be better strategy wise etc?

I recently did a cash out refi on an investment property to pay off the line of credit I had used for the downpayment on said property.I have about $5k in funds left over, and I'm trying to figure out what to do with ...

They know that an investor will not fight them, because we cannot afford the carry cost from the time it would take.

I've actually done the same thing with washers/dryers that I provided as a convenience to the tenant because I had extra ones.