So I have tried to read the Dodd Frank legislation, but I can't make heads or tails of it, but some time back, I'd heard that we couldn't advertise the way we used to for private lenders (Attn Investors Earn 8%-15% return on your money secured by first mortgage in real estate)...  

If I were dealing with them, I would throw out the possibility of earning a small % of their brewery business over time.

Trevor makes a great point in living in a duplex or multifamily gives you ownership, ability to earn equity, and ability to rent out. 

Of course, you will have underwritten the deal at sufficiently conservative financing rate - like the BoC posted 5-yr, fixed-rate reference - that the business easily throws off cash at the actual financing rate.If you are disciplined enough to apply the "cash-back" directly to the mortgage principal as a pre-payment (some lenders will {strongly} encourage this approach) it is a good thing ... if you use the cash-back on a rental property financing to pay-down the principal on your primary residence (where mortgage interest cannot be deducted as a business expense) you may warrant extra kudos.If you are certain you can re-invest the cash-back and earn a higher {net} return than paying down your mortgage financing {particularly that on your personal residence which is paid with after tax income}, the cash-back can be a good thing.  

Even at just 6% appreciation, you'll be adding another $15k or so in value per year, and then you could sell it at the peak of the market if you like and make your money then or 1031 exchange the equity into another investment property without paying capital gains on the profit.One thing you might want to consider is looking at 2-4 unit multifamily properties (duplex, triplex, fourplex) as the lending is the same as other residential and it's much easier to get a return.As far as neighborhoods go, it's really street by street, so you need to look at each property individually and can't just assume a neighborhood is good or bad based on the zip code.BUT -- if you want a general suggestion of areas to look in where you may be more likely to find a good buy, I would try looking in Carmichael, Citrus Heights, Arden Arcade, North Oak Park, North City Farms, etc.

How does one know when a neighborhood is up and coming or if it already peaked?

I realize nothing is given and everything is earned and I have lived by that mindset all of my life.

Congrats on a successful and well earned investment!

It would take a while to get to the point where it is going to generate 3k per month, but it is possible.If you are pre retirement age, then you wouldn't want to invest with the intention of using the earnings to fund current living expenses.There are many avenues and it may take a combination of different ones to reach your goals.You could also consider partnering with one or more other people so that you are not coming up with all of your own money to fund your deals.Good luck on your journey!  

We're also in CA, so for what it's worth, here's one that details our process: Becoming a Private LenderBy loaning locally in first position only, with sufficient capital you should be able to safely earn around 12% to 15% annualized.