SoCal is not a place for cashflow unless you hold a very long time and even then....i live down the hill from you and invest in AZ, KC and Indy for that reason.your best chance in SoCal would be to buy a dumpy duplex to live in and rent out one half. that would allow you to build up sweat equity as you would fix up your half then switch sides and repeat. you could raise rents and likely sell for good profit (depending on market of course) upon exit....or just use increased rent to have a nicer unit paid down fastergood luck

Let's say I'm a young married couple, I have very few assets to protect and I'm looking to purchase my FIRST rental property.  

The trick is finding a team of people you can trust, using layers of protection and advice, and making sure everyone else makes money so they are happy and want to take care of you.If you think about it, unless you're a super handy guy or insist on managing your own properties, you wouldn't need to go directly to your own property even if it was right down the street.

Even though rates and down payment may seem high, if there is any legal trouble associated with that property, you can sleep at night knowing you and your personal assets are protected.

They have been given a chance to move in and hopefully own a very upgraded home will all upgrades that they could never right now afford, and they are too lazy to: recycle dead batteries ( it's hard to drop off at most car supply stores, Sears, etc), do not live up to agreements with any company ( landlord, DirectV, Dish TV, etc), Always switch jobs ( I approve the lease based on their incomes, and they wait until moved in and then change - as if they know how the landlord "game" is played), etc.

Just another perspective:  In most states your house would be asset protected, so it's untouchable to creditors or suit.  

Creates another layer of asset protection in case of an FDCPA or other suit.

I wonder if their protection laws are any different.  

A open statement like that from a realtor would leave me wondering who they are working for, since contingencies are there to protect me.

Besides paying a higher interest rate you might end any liability protection you have from using a corporation if it owns your vacation home.