Few quick pros and cons off the top of my head, having bought seconds for a few years.Pros: - cheaper to get into (you can get high quality ones for 10-20k)- safety through diversification (you can buy more notes with the same money and spread your risk that way)- generally much higher returns (we've had a lot of notes with 100%+ returns and recently got one with 1,000%+ return)- typically don't have to deal with taxes, HOAs, and as with all notes don't have to deal much with physical propertyCons:- Less inventory available, with rising prices and more competition- Lots of underwater inventory so you often run the risk of a) getting wiped b) having note sit in the drawer for a few years- Have to deal with scum-of-the-earth bankruptcy attorneys- Requires much more interaction with the borrower, since foreclosure is rarely the optimal play- Fixed costs are killer on 2nds (ie 1 foreclosure on a 50k first is a ton cheaper than 5 foreclosures on 5 10k notes, so is servicing etc)There are a ton of pros and cons to both, and both are great.

Hows that for diversification? 

I think diversification is key: real estate is great for appreciation ( if you got in at a right time), tax liens for high yield, notes for cash flow, high yield and maybe some appreciation if bought at discount.

There are some interesting angles to it such as instant diversification w/lower entry points, across geographies, various sponsors and niches.  

DSTs can possibly give you the benefit of diversification with properties with multiple markets.You can read more about DSTs in this blog I wrote,https://www.biggerpockets.com/blogs/7993/48972-set-your-financial-life-free---with-dst-investments

The other two are looking for long term diversification so we went with 24 months with the option to extend if both parties agree to it.

They provide you with hard real estate, but can also give you some diversification.

I've always looked at vacant land investing as somewhat of a "cheap" form of diversification.

You could tomorrow be investing with MHP operators that have years of experience, be invested in a pool of properties (diversification) and getting cash flow into your bank account monthly in about 90 days from signing up.  

For stock market exposure, consider going the passive indexed ETF route, which carries the same diversification benefits as mutual funds but trades like a stock (maintaining liquidity) and has MUCH lower fees.