Hello from San Francisco! Is the Bay Area right for me?

[Max Maloney]

Hi everyone, 

I'm hugely impressed with the quality of information I've found here so far, so I wanted to say hi and introduce myself. My name is Max, and I'm a San Francisco native. I'm in my late 20's and a Mechanical Engineer at Apple. 

I'm here for 2 reasons: 1) I bought my primary residence in San Francisco in late 2014 and I caught the "bug" of real estate - I just can't stop looking at properties! I find it hugely entertaining. 2) All of the successful folks I've known in life have owned several rental properties, and really enjoyed the rental incomes as a retirement cashflow later in their lives. 

So, I'm interested in learning more about purchasing rental properties. 

I have a little over $325k in the stock market right now and I'd like to diversify my overall investments by moving a hefty portion of this into a rental property downpayment. My struggle is this: Ideally I would like to buy my first rental property within driving distance so that I can manage it myself - but as we all know, the Bay Area is quite expensive. Is the Bay Area really only a good deal if you're looking to make money on raising property values? Is it not a good cash flow environment? Would I gain a better cash return if I look in other markets, possibly out of state? 

Or, if investing in a place in the Bay Area is possible for someone with my amount of free cash, what sorts of properties / areas do you recommend looking in? 

Another question is: If I look in a cheaper out-of-state market where I would have enough for all-cash (or at least much more than 20% down), is this even an option you would recommend? It seems to me that with interest rates so low, I'd be a fool to put more than 20% down on a place no matter where it is. Am I missing something? Why DO people make all-cash offers? Related to this question is - would it be a better overall investment to pay down my current mortgage in big chunks over the next few years so that I can own my home outright within the next ~7years, and THEN start looking at rental properties?  (I realize that this is more of a question for a financial advisor, but just curious if anyone else has been in the same boat!)

I realize these questions are a bit broad, and I'll look forward to narrowing my focus (and my questions) as I learn more. 

Thanks!

-Max