California has historically been a major destination for real estate investment. For example, one major investment real estate brokerage sells almost 92 percent of its California-based listings to California private investors. However, California real estate can also be expensive, and supplies can be scarce. Nevertheless, there are at least six good reasons for why California real estate investment has been such a good bet over the years:

Making the wrong choice about a real estate investment can be a truly painful experience, not only for one's wallet but for one's ego. While the monetary loss will eventually be recovered, the shock to one's business sense is not so easily overcome.

Like most investments, the best return on investment in real estate typically comes from assets that either require more risk or require more work. While a stabilized Class A apartment building in Southern California might offer anywhere from a 4 to 6 percent leveraged year-one return, other investments can offer 30 to 100 percent returns.

Hard money lending is a very different animal than traditional lending for real estate investing. Instead of dealing with an employee checking off boxes in a file, when you work with a hard money lender, you're working with an investor just like you. This means that your communications can be much more direct and much more symmetrical. After all, your lender is looking for the same thing you are -- a profitable transaction.

There are seemingly endless infomercials on TV that promise a quick and surefire way to make money in real estate. For the prudent investor, one question should always stand out about these hucksters, “If they are so good at building phenomenal amounts of wealth through real estate investing, why are they selling DVDs over the air?”

Every state has its own rules for the practice and ownership of real estate, and California is no different. If you're going to be investing here, there are three California real estate laws that you should keep in mind as you structure your investments and the way that you do transactions:

For all but the most-seasoned real estate investors, finding the right partners and lenders is a task fraught with risk. For this reason, many inexperienced real estate investors turn to family and friends when they come across a potential deal. While this process may work in many instances, it is by no means a guarantee for success. Here are some things to consider when looking at these sources of funds and partners: