Real estate is one type of investment that seems to outperform all others on a regular basis. There have been exceptions, such as the 2008 recession where property values plummeted across the country and many people lost their homes. In this instance, the Wall street bankers got too aggressive and started handing out mortgages to anyone with a pulse and the whole system was thrown out of whack. Once the whole financial scheme was exposed, the world economy went into recession and narrowly avoided a depression. Home prices fell dramatically and people walked away from their homes because their mortgages were underwater, which just means that their mortgage was higher than the home was worth.

Fast forward to today and the market has balanced itself out and more regulations have been put in place to control what the banks can do. Homes are priced at levels that truly reflect their value and prices in general are on the upside. So with the exception of that unfortunate period in 2008 and a couple of other instances prior to that in the 20th century, real estate is usually a great investment. The biggest reason for this is the fact that real estate is tangible which means that there is a physical asset that you can touch and feel, unlike stocks, bonds, and other financial investments. Another reason real estate is a great investment is scarcity. They are not making any more land, so you can’t just produce more of it like you can with stocks, and printed money.

The other aspect of real estate as an investment that a lot of people are reluctant to try, is buying rental properties. This can be a great strategy for passive income, if you can find the right property to rent out and have it operated in a cash positive situation. This just means that the rent you collect from your tenant exceeds your expenses which might include your mortgage payment, taxes, HOA fees, and utilites. If you can make at least $100 extra each month from your rental, you will be in good shape. Sure you can’t live off $100 a month but your tenant will be paying your mortgage for you and in 20 or 30 years you will have paid your property off and then you will get some real passive income because most of that rent will now be pure profit after you pay your taxes and utilites. Another great benefit of this strategy is that your property will almost surely increase in value after 20 or 30 years, so you end up with a property that is paid in full and now worth potentially twice as much as you paid for it, or I should say, your tenant paid for it.

Here are some other good reasons to invest in real estate in the southern California market