If it’s not, then of course, this won’t be the first time I’ve been terribly wrong in money matters.

If my tenants don't have a job and can't pay rent due to this situation and my job doesn't pay me to cover due to this situation, but the lenders and banks still hold me responsible to pay them, then I say that this is a literal break/schism from the cycle of money and on top of it, they own/collateral the assets so, we the people/investors get the shaft while the institutions get bailed out for this situation...someone please tell my thinking is wrong on this

I will let you know how it goes.https://www.biggerpockets.com/forums/530/topics/844484-loftium-airbnb-arbitrage-gone-wrong

If the inspector was wrong, then you should ask for your money back. 

I would do the first fix and flip for the love of the game, know all the details so in the future your contractor can't screw you over, or if he's doing something fundamentally wrong you would know.

I'm just trying to figure out if this is a healthy financial practice or maybe an indication of something gone wrong.

You are at the mercy of comparables with 1-4 unit investing.You can contest an appraisal if there are clear errors (wrong room, bathroom, or square footage counts) or poor comps were used. 

But I'm most wrong & have bad timing :)

There's bunch of trade offs but we invest in CA because it's close to home, high quality, high demand, and if anything goes wrong I don't have to hop on a plane to go see what's going on.

I’m not saying your wrong, I’m saying this isn’t a recession we’ve seen before, any result is possible.