To add on to Josh's comments, Dane County has a very robust and diverse economy which is great for mitigating risk. 

Indicators like diverse employment, rising wages, not easy to build (but currently constantly getting easier), housing shortage, low vacancy rates, great climate, etc. point to the high appreciation CA cities having continued long term appreciation (market and rent).I hinted at the state level movement to increase housing.

I am painting broad strokes for simplicity.I feel that diversity and knowledge are inversely related...need more diversity when knowledge is low to mitigate risk and less diversity when you develop expertise (leverage it).

Alameda is really diverse in its renter population as there are so many large homes and Victorians that have been converted into multi-family units on the island (due to Measure A that restricts density per parcel - http://www.saveourcityalameda.org/alameda-measure-... ).

The next wave of growth is coming, it's a solid market for many reasons - geographic location, climate, diverse employment base (ever expanding), higher education, no state sales tax, hospitality, cultural, entertainment, ...

That's why a passive investor should always perform their own due diligence on the deal, the team, and the market before investing.For the deal, you want to review their underwriting assumptions (debt, rents, annual income and expense increases, etc.).For the team, you want to review their track record of successfully taking deals full cycleFor the market, you want to review the fundamentals (population growth, job growth, job diversity, median income to median rent ratio, etc.)

I originally got interested in the investing world through the stock market when I was 18, but have grown obsession with the diversity of the real estate industry.

However, some people have their 401k’s, IRA’s and own a diverse stock portfolio in addition to real estate.

Chapters 13-16 cover "Market Evaluation", and chapter 15 specifically covers 7 factors such as unemployment, population, job diversity, supply/demand, etc.They more or less read the book, or at least excerpts on some of the show episodes.

I'll see how it goes in the future if the ROI continues I think I'll keep investing for a bit of diversity.