After reading much into the CA real estate situation, I sprung up an idea.

How about investing in out of state real estate say for example Houston or Phoenix? I heard you can buy a nice home in Houston for half the cost in CA.

What do you guys think?

Of course major research would be needed but w some hard work and good research I think this can be accomplished.

A lot of people invest in real estate in areas other than where they live. As you said, a lot of due diligence, a GREAT property manager (typically 10% of monthly rentals), and screened tenants can made investments attractive. You need to see what the numbers are to make it work. In some areas, rents are actually cheaper than existing mortgages making it impossible to recoup your investment.
There are a lot of questions to ask yourself including what is a reasonable cap rate for you, are you willing to put up with aggravation, can you afford a loss on the property, etc.

...or Atlanta GA.

Sure...you can buy real estate in any lagging market, but the question is...what is your intent with it?

Are you looking to live in it....rent it....re-sell at a future date?

If you are just looking for an investment...you may want to look into buying properties in default for taxes aka tax liens. You can get a considerable yield on holding these notes.

Do a Google search and read up on it, as I don't have any specific site to recommend (nor would I). Steer clear of those selling information on how to do it. You could find that out easily from your local tax assessor's office, or the tax office of the area you are looking to invest in.