Industry/company diversification and longevity are some of the main things to look for when evaluating a market.

It's a no brainer, especially if your an income diversification guy.

With more properties, you may get a better deal or just be able to afford the cost better due to diversification across properties. 

., as others have pointed out, if you’re looking to take a more passive role in your real estate and want the benefits of diversification there are funds (small portfolios of properties) available to accredited investors that are designed to allow investors the opportunity for ownership of institutional investment grade property that is occupied by regional, national, and Fortune 500 credited companies. 

@Jesus Minier : that's what I would think - diversification is good.

Economy of scale, hard at work.With that said, at some point you do need to consider diversification.  

Putting some money in the stock market is diversification.

I speak w/busy professionals on a daily basis, many from high cost states such as CA, looking for better value, geographic diversification and expert care / investing of their funds.  

Other than that loose definition like kind can mean anything - agricultural land for commercial, single family for multifamily, raw land for residential, etc etc.What your are talking about when you mention selling one and buying more than one is commonly called a diversification exchange.  

And sometimes the long hold time can result in appreciation that overcomes bad execution...something that is less likely with flips (but is a driving force behind the many posts you see that say "we meant to flip it but it didn't sell so we decided to rent it out"...whoops).One way to balance the risks in flipping is to do it in a fund structure, which gives diversification amongst several deals at a time so that one blown deal is a drag on the overall vehicle but doesn't wipe out an investment.