Is it wise to invest in same town?

[Jhansi B.]

I am a realestate investor (if I can call myself that) and I like to invest in single family homes. I invest in a small town not too far from where I live, so far my investments have perfomed well.

I am not able to find another town with similar price/cash flow range nearby and I keep going back to invest in the same town. My goal is to own as many homes as possible (including financed purchases) and my question is, is it wise to invest all in one town? I understand importance of diversification in stock investments, is it important in realestate? I average each single family home around 160K. I want to hear your thoughts.

Thanks