You have to consider real estate as part of your portfolio, it will add an element of diversification to the stocks and bonds while at the same time has unique taxation situation that you could take advantage of.

I would prioritize finding an accountant who specializes in real estate taxation over one that is local.There are 20+ accountants on this message board who specialize in real estate taxation.

This is separate from taxation, though...Hope this helps :)

@Rob NewsomInvesting in a state with an income tax may require you to file a non-resident state tax return with that state.States normally try to avoid double state taxation by providing a credit for taxes paid to other states.I would say - look to invest where the numbers make sense based on your critera even if that means looking in a state with an income tax.There are 7 states without an income tax - with your logic, you are missing out on investing in 85% of the united states.