Despite the current set-backs, San Diego's economic future shows steady growth. San Diego is a great place to live but an expensive place to build housing. Forty-to-fifty percent of the residents rent and the rental demand is generally stronger for a home or a condo. The local economy has enjoyed surges of growth and weathered recessionary times as well. These economic swings have been reflected in real estate prices and rental rates. Putting the highs and the lows together from the last 35 years everyone owning a house or condo purchased during this period wishes that they still owned that property and were renting it out in 2008.

Don't misunderstand. There are investors who have made mistakes owning rental homes, even in San Diego. Here are the primary mistakes I and others have made:

• l have owned too much of a good thing: too many properties; too little equity in each (leverage).
• Many of my real estate decisions: terms of purchase, management choices and maintenance criteria were based on the expectations of short-term profits instead of a long-term holding strategy.
• My situation has often been complicated by the fact that my livelihood has always been in the real estate industry. Therefore, returns on my real estate holdings were off at the same time my employment earnings were down.
• I churned real estate. That means that I bought - sold - traded up looking for the optimum return from a bigger or better property. Sometimes I sold prematurely because of a problem tenant, deferred maintenance or my depreciation write-off was used up.

Perhaps they lived in a San Diego home then were transferred out of town. Thinking they might return some day they turned it over to a property manager and kept it. Maybe they traded to a larger home but wanted to keep the first one as a starter investment. Maybe they refinanced instead of selling (a less expensive alternative) and just kept owning the first property. Maybe the sales market would not allow them to sell when they wanted so they kept owning it; such is the case in 2008.

Whether you currently own a San Diego rental home or condo for an investment or by accident you are in an enviable position. Here are key factors for successfully turning your rental home(s) into the bedrock of your financial prosperity:

• Own a well-located home or condo as a rental maintaining at least a 30% equity position. Pay down loans to achieve this safe equity position as quickly as possible.
• Repair and refurbish the property to maintain physical quality.
• Carefully review rental applications for a long-term resident that can afford the rent and has a history of paying on time.
• Retain quality residents by responding to legitimate service requests.
• Let a professional manager keep you buffered from the daily drama and personal liability of rental property that can motivate a premature sale.
• Keep good records to document expenditures and optimize your tax write-off.
• Protect yourself with adequate insurance and control your liability with professional property management that inspects your property and respects your tenants.
• Don't lose valuable equity $$$ to selling expenses. If you must sell hire a real estate agent that is experienced in selling with a tenant in residence. This experience can lower your cost and frustration.
• Periodically, evaluate whether you should refinance existing property and purchase additional property. This method maximizes the return on your equity. Remember to maintain a safe equity position in all properties (30%).
• The rental market changes and you must stay in tune. This process has been made easier with the Internet. Continue to stay in touch with real estate investment professionals that can help you interpret this abundance of information.