I think what I am looking for more insight on is less in regards to purchasing/renting the homes and more what to do with my cash now:
You can't really isolate the two from each other. Also, are you sure you can get a 10% down mortgage on an investment property? I havn't looked into it in a few decades, but I'd be surprised if you could do that now.
Is 50K enough of a safety net? Damned if I know. Can you pay a mortgage, cover repairs on your own home and the rental(s), pay liability insurance on your rental(s), litigate an eviction with no income coming in for a year, all during a multi-year downturn in the RE market, and still support your lifestyle with just your wife's income for 3, 4, or 5 years? What if she gets laid off at the worst possible time?
No one can tell you if $50K is enough for all of that, but a mere 50K cushion seems to come with some pretty aggressive assumptions to me. It could be wildly successful. But what if it isn't?
If you weren't planning on becoming a real estate mogul (and hey, nothing wrong with that, eh?), the answer to where to invest your excess cash flow becomes a lot simpler.
Renting real estate, however, is by no means a passive activity. If you treat it like a passive investment, you will lose. Be prepared to bust your ass doing it, if you're going to be successful.
Make sure you are well-versed in Federal and State fair housing laws before you embark on this approach:
https://en.wikipedia.org/wiki/Fair_Housing_ActSource of income (welfare, food stamps, etc), in California, cannot be used as a reason to deny a rental; otherwise, you open yourself up to a losing lawsuit. Being a landlord in California pretty much means you are a junior partner with the State and Feds, where you bear all the risk.
There are definitely
"renter sharks" swimming around that might know how to exploit the laws much better than you might, if you're not at the top of your game. You also need to become familiar with any rent-control ordinances, if they exist, in San Diego.
Renting real estate is a very different game than selling it.