Don’t try to have your cake and eat it too.

But, what’s the best strategy for someone who wants to own property, but just as an “aside”; to diversify their portfolio, hedge against inflation, or build a retirement nest egg?

Yours sounds good, but I'd be a little leery of putting all my eggs in the one basket. 

I really suggest you change your goal from making a tiny taxable cash flow (anything less than $1,000/mo per door.) until capex eats it up.

Business should start to extend only because there is nothing left to eat in the market not because you are losing in the competition. 

One month vacancy can eat up all the cash flow.

I think you run a real risk of your second rental eating up the profits you're enjoying on the first one.

Managing five rentals can eat up a ton of time in any given week, often at times that are inconvenient to you and your personal interests (family, hobbies, travel, etc.).Of course you can manage on your own.

I understand they can make our life a lot easier but is it worth it if it eats up a lot of our cash flow? 

The Exchange Accommodation Titleholder ("EAT"), often a sister company to the qualified intermediary, will form a single-member limited liability company and disregarded entity or ("SMLLC") to serve as the lessee.