The "instalment sale" term mentioned above referrers to potentially advantageous tax treatment on any capital gain on the property. 

@Keegan Rosett the first and most important thing to know is unless your approaching an existing operator in the space, and just throwing $ at em to gain an equity position, IT IS NOT INVESTING. 

@Dan Keefeif you're trying to make a return that beats the interest rate on a HELOC to generate "passive income"... that is going to be very, very tough. 

Treasuries or structured annuities to fund your future payments.Tax Advantage: This structure defers capital gains tax as the gain is only recognized when you receive the installment payments.

Why should a passive investor turn to California now?

The tax hit on capital gains and depreciation recapture will likely hurt. 

You could 1031 into something more passive like a DST.

Work for a syndication company or REIT for as long as it takes to gain the knowledge, experience and responsibility to handle the management of a syndicated property on your own.  

It’s been cash-flow positive, with strong reviews, minimal vacancy, and runs on a fairly passive system I’ve developed.My Goal: Now that I’m local to Orange County/South Bay, I’d like to apply the systems, experience, and insights I’ve gained to launch a property management company focused on both midterm/furnished and traditional long-term rentals.

While real estate is technically the largest asset for many, especially homeowners, its value is often more passive and abstract unless it's actively leveraged.For the average homeowner, that equity just sits there—not generating cash flow, not being reinvested, and in many cases, not even fully understood.