Are my investments sound

[Brad Rondeau]

Hello, I continue to question my investment in Laguna Niguel CA. I purchased a 3 bdrm condo for $365,000 in Dec 2009 with 20% down. I now have a 4% loan but pay $280 in HOA fees monthly. I did about $16,000 in improvements - paint, carpet, remodel kitchen etc. I lived in it for one year and then started renting in Jan 2011. I started renting at $2,175 and next month the rent will be raised another $95 to $2,340.

Looking at my 2013 Schedule E, I made $26,700 in rents and show Total expenses as $28,107 (depreciation, taxes, interest, repairs, gas). Repairs/maint are very low each year around $300 (maybe one plumber or pest control visit each year). Unfortunately because I earn to much I write off any of the loss. So I have a small negative each month but the house has risen according to zillow to $465,000. I expect the appreciation now to slow. I expect to have a small negative or maybe break even. I know I should have a positive cash flow but this will take more years of rental increases. I've had the same tenants for over 3 years and they are great. I see other investors with huge cash flows but I can't even break even or get tax advantages from loses. Would I be able to take these tax loses if I got a real estate license (would be a real estate professional). Does it make sense to keep this or sell next May when the lease is over? I'm nervous about taxes and don't know how it works since I lived in it for one year before renting. This property is held in my trust but wonder if I incorporated - would this help me tax wise.

Also, it seems it is impossible to buy a property in southern California and see it flow cash as mortgage payments are way over the monthly rent. Is this a terrible place to be a realestate investor?