They haven't failed me in the past three years, but there is no depreciation and minimal diversification. 

In addition to building a real estate portfolio, I am looking a diversification strategies so I'm not holding all my cash in one market. 

All said, I still think that income producing property is a good move for any investor even if you only view it as a means of diversification or  as a hedge to inflation.

Items like, rent growth, job growth, income growth, job diversification, population growth can be good starting points. 

Diversification.

Maybe it's not the best startegy as I know that you get really wealthy by getting really good at one location, but I like the idea of having some diversification with location and it sounds sexy as hell to one day say "I have property in every state." 

@Jonathan Klemm To answer your question, its partially I'm interested in both and partially risk diversification.

The macroeconomics of this area, diversification of industry, and desirability of the "mid size city" has outpaced growth compared to other markets.

Multiple income streams provide diversification of earning power, reducing dependence on a single income source while increasing income.  

Some good metrics to help identify target markets and submarkets are; population growth, income growth, job growth, job diversification, rent growth.