Invest in real estate - it represents diversity in your overall portfolio so if you are taking cash out of equities to invest in real estate then you are potentially building yourself a portfolio that is positioned for excess returns with lower volatility.

The liquidity and volatility played correctly can yield quick returns.

I agree that option 2 is too risky because of HOAs and changing CA policy volatility against STR and the like.

For me the stock market is too volatile today for short term money.

Now compare the options: treasuries are low, savings and cds are insanely low and locked in, stocks great return lately but highly volatile and pretty high price to earnings.If you are a smaller investor you can do much worse than finding a decent but not spectacular deal in a class A asset.

And how volatile it can be.

I do believe there are certain things you can do to do somewhat better than the market and reduce volatility (Overweight smaller companies, value companies, and companies with higher profitability), but this is NOT the way most money managers work.

Sure it'll not be the most ideal conditions to live in but I'd be a little better off financially and able to stress a lot less knowing that I can start saving every month and get out of debt that I got into during the last relationship.I'm not against turning my home into an investment home and renting the entire thing out but that put's me and my mom on the streets unless I have another property investment we could move into and at here age the volatility and moving in and out of new homes is not a good thing for her.   

Her bank got her a chase investment expert who put all her inheritance into the stock market and she is already down 10% and going crazy with the volatility.

That return is 60% per year assuming I do not raise rent or account for principal pay down and appreciation.In 5 yrs of holding: 30k cash flow10k principal pay downAbout 10k to 15k appreciationAbout 50k profitIndexes historically grow at an average of 7-8%Over long term, matter fact 5 years may not be long enough to hold an index as market volatility may experience extended cycles of depression.