And finally, there is diversification of the stock portfolio so that all the dividend income is not concentrated on one (or just a few) companies or industries. 

You could start there and then branch into some other strong areas that give you some geographic and niche diversification.  

There is certainly something positive to say about diversification.

I really like syndication for geographic and niche diversification if you also like to venture into other areas besides MF apts, but maybe self storage and mobile home parks that have good demographic and supply/demand trends playing into their favor and throw off a lot of cash.  

There are several good funds such as Broadmark and Arixa that give you conservative loan-to-value, instant diversification into hundreds of loans, the ability to liquidate quarterly after a lockdown, etc.. 

To answer your question, I plan to make RE investing a part of my current portfolio for diversification purposes (other than my primary residence of course) and I'd ultimately like this to be a replacement an alternative to my regular work.

The benefit(s) of diversification will likely get washed away in the cost of management. 

@ryan Alacon for me it is about diversification with in the business. 

As for your saved up cash: I wouldn't put all eggs in one basket, as this article points out: https://www.biggerpockets.com/blogs/10850/76519-do...Aside from diversification, there are various potential passive investing strategies and some have already been suggested by the folks here.

You have reduced your risk via location diversification and by having significant assets to weather most down turns.I have little location diversification (we have one OOS that is our worse performing RE) but I also have the assets to weather most down turns.