I don't know if I'd invest there because I believe in heavy diversification.

@Joshua Mayworm, that’s a form of “tax diversification,” and nothing necessarily wrong with that at all.  

Not all that popular with the buy and hold crowd but a nice diversification. 

And if we talk about diversification, so the real estate market is more complex at this point.

I'm happy I have my real estate holdings as diversification. 

I agree that diversification is key to any good financial plan, and you need to think in a broad sense across all of your portfolio (taxable and tax-exempt) when making allocation decisions.That said, there are a lot of alternatives to the stock market that you can look at besides direct ownership in rental properties which you are already doing. 

Dallas will continue to be a strong market because of our diversification in the employment sector.

Is that good diversification or would I be better off using all of my savings toward real estate? 

Times like these are great reminders of the importance of diversification.  401k contributions to the match are always wise. 

I am merely saying that real estate tends to be more risky than other forms of investing due to leverage, lack of diversification and the illiquidity of the investment.