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.  

Diversification and reserves and you can withstand just about any downturn in the economy/markets. 

I like the diversification  :)

I have recently seen a rise in credit score requirements on loans (to include FHA/VA borrowers), debt ratio reviews, additional diversification and some liquidation in the portfolios of credit unions as well as banks to strengthen their position in preparation for what is coming ahead in the markets.   

If you really want to use your IRA to invest in real estate I would let the market rebound and then invest via a self IRA as @Carl Fischer Said above.personally, I like the diversification of having my IRA in the stock market and my real estate investments separate. 

@Marcus Johnson one thing that the anti-leverage crowd often misses, is that you're trading leverage risk for diversification risk.

I'm curious how others model their total portfolio's when using Real Estate, and how they come to their conclusions about allocations and diversification. 

Our tax deferral strategy was 401(k)-solo's all invested in REI & that lack of diversification HAD produced some heat from financial guys, family & business partner.

With that said, I strongly believe in diversification so I am content with it.

Not all funds are created equal, so there is more than one answer here.In a general sense, funds offer the advantage of diversification—at the very least among properties.