those funds for short term high yield lending could be appropriate.. in reality that's how most HML companies work they have some sort of LOC  at a rate in the 5 to 6% rate and they loan at 10 to 15% apr and make the delta..now with 450k that won't exactly changed your lifestyle but it could bring you in an additional 30 to 40k a year with mitigated risk and no risk to tenants..

Local laws are loose on owner occupied sfr and short term rentals

FYI - City marine, and I assume others, charge a primium to owners who do short term rentals.  

We will be closing on the first property there on Feb. 28th, 2018 and the 2nd property shortly thereafter.

This may be a silly question, but if it's a cost thing in the short term...could you build multiple pads < 5000 sq ft and avoid the engineering costs/permits?  

So, what, then, to do in California, short of having the tenant go to the tax office in person?

The Airbnb rules are wide-open for Airbnb and short-term rentals down there.

Like Brent stated, you could look to do a fix/flip and then if the market supports it, leverage this property to scale up into other properties.I think the only thing that I can add is to identify your goals (short term and long term) and to research and educate yourself about interest rate trends, options, and about investing in real estate.

They are funded by short term deposits so they want to make short term loans so they are matching duration of assets to liabilities.

If you are taking HELOC for short period of time its fine but if its long term its not worth to pay high interest rate. you can always go back to 30 years loan.