For CA, price can drop lower, prob no recovery within 7 years

It's good to be conservative. Both 1 and 2 are not very good deals to be strict. The good-deal formula is price/rent must be less than 100. In choice 1 it's exactly 100. In choice 2 it's way > 100. You may have vacancy or repair cost and etc. So, I will not include depreciation. About inflation, it's more remote, for conservative reason, I won't take into account for now. Basically, I will only do deals that I can achieve price/rent