Purchasing rentals is always a good idea for growing real estate wealth. In purchasing a rental property there are different lending guidelines which may require you to have 6 months worth of resereves in the bank to cover you if the place isn't rented. You will also want to have "emergency account" in the event you need to do unexpected repairs.
If your main concern is the market hasn't bottomed out (no one can answer that for you) I am curious as to why you are looking for a rental. And, with interest rates at a low point it may be wise to consider purchasing a home you will live in to take advantage of those rates. Rates for investment properties are typically a bit higher. You really need to consult an accountant to see if that is the most tax effective way to invest your money at the current time.
As someone else mentioned you need to find a professional Realtor you feel you can trust and work with him/her to develop a plan to purchase property based on what your needs are. I own both rental property and a home in Folsom. The prices have gone down but I have every confidence they will rebound quicker than some of the other areas. However, El Dorado Hills, Rancho Cordova, Fair Oaks and some of the other areas are nice areas that will come back as well.
Location, price and your overall goal shoudl dictate where and if you purchase rental property vs. a personal home.
Alain Pinel Realtors
CA DRE #01143335