Best place to invest for a California resident?

[James Khail]

I'm in a bit of a unique situation in that I'm a California resident and can only invest in properties all-cash for religious reasons.

I'm not able to use leverage/loans, and I know and accept that investing all cash is not common, but thats the way I do it. 

My goals are purchasing single-family homes in lower cost areas ($250,000 maximum purchase price) and my priority is buy and hold. Equity/appreciation is less of a concern for me, although it'd be a nice to have. 

I'm also not interested in condos/townhouses as I owned one previously locally, and it really restricted what I could do. 

I've been debating where I should invest for a number of years, and think I need to just get into it, as a lot of time has gone by without me doing anything. 

The reason for the delay is because I initially thought I'd invest in low cost areas of California like Fresno, Bakersfield, Stockton, Sacramento, etc (due to being somewhat within driving distance of the SF Bay Area) but I held back because California's landlord laws made me very concerned.

I didn't want to end up in drawn out court battles with a renter just squatting at a place I purchased with my cash. 

For that reason, I decided to start flying to/visiting states like North Carolina, Ohio, Texas, Missouri, etc. 

The issue I found when visiting these places is that the nicer suburbs are not much cheaper than some of the cheaper areas of California (many single families are in the high $200,000's/low $300,000's so the draw is not as enticing if I can purchase something in my state for a similar price). 

I know the quality of the home and neighborhood won't be the same in California, but because I'm targeting buy and hold, I just need a property with okay or decent rental yields. Not a fancy ranch home or newer build.

After visiting these States, I just didn't see the benefit of investing in $200,000 in a B- class neighborhood in Ohio, which is a 5 hour flight away, when I could maybe invest a similar amount  in the California Central Valley in a C class neighborhood that I could drive to when needed.

Yes, the landlord laws may not be as friendly, but maybe I could just be really stringent when fielding tenants? I've also heard anecdotally on BiggerPockets that the concept of other States being super landlord friendly is sometimes overblown (in other words, sometimes even in the most landlord friendly states, things can get sticky)

In other words, I'm not sure how much the potentially friendlier landlord laws would convince me to purchase far away in other state, when that also comes with its own challenges (the inability to self manage, property management fees, etc) 

This debate on whether I should locally invest vs out of state has left me wasting time so now I feel I just have to make a decision and go for it. 

1. Would it better as a California resident to invest my money in a low price area of California due to driving distance and proximity? Or are the landlord laws simply too draconian in California to warrant the risk? 

Are decent buy and hold returns still found in some parts of California? If so, which regions should I be looking at?

2. Or would it simply be better to stick to my original plan and just go out of state? Any states close to California with good rental returns where a single family (3/2 or 2/1) can be purchased for $250,000 or less, all cash? 

Unfortunately, this is my max budget, and I wouldn't be able to go above this amount at all.