For instance, if three of my properties are generating significant cash flow and performing well, they can offset any issues that may arise with another property, such as a heating system failure.

I do notice that the annualized return generated by BP is usually quite a bit lower given the same inputs.  

I would suggest establishing teams in both markets and evaluating which one generates leads that align with your investment criteria.

Many cities have high overhead costs that consume a large portion of generated revenue.

This works well for wholesalers who sell deals to flippers, and flippers or investors can benefit even more by going the extra mile to generate their own off-market leads.

Cash Flow: If your rentals are generating solid cash flow, you could keep using that money to build reserves, reinvest in more properties, or improve your existing ones.

The cost segregation study generated $80k in passive losses, meaning a portion of that would be recaptured as ordinary income (at a 25% federal rate).

But my rental is not generating any cash flow in fact I have to pay for tax and HOA out of my own pocket.  

Renting multiple rooms is a great way to generate high cash flow from your properties but I must call out a much overlooked watchout... many lenders will not allow this type of property use and refinancing them can be tough. 

You can also focus on dividend growth stocks within your taxable account, as dividends can be taxed at lower rates, especially if you hold long-term.By balancing real estate with traditional investment strategies like bonds, stocks, and tax-efficient accounts, you’ll have a diversified approach that generates tax-advantaged income while minimizing risk.Let me know if you need help strategizing further or exploring real estate financing options!