I'll be working to increase my stock, bond, REIT and note allocation over the coming years, so that my allocation isn't so heavily weighted towards real estate (the opposite of your situation).

Your Schedule E losses can go up to $25,000 but if you have expenses that cannot be allocated to the rentals, they show up as a passive loss (that you can't deduct) on Schedule C. 

I am allocating about 10k for each unit, but totalling around 400k.

@Gene Maryushenko Variable Cost PM is the % of the income allocated to the property management

I also plan to allocate time to explore alternate deal-finding avenues beyond the MLS, including probate listings, foreclosures, vacant properties, wholesalers, turnkey, etc.

Frequently SFH owners will think the cash is flowing well when they're not allocating an expense for the new roof or to paint the outside.

Only retiring with rental property is a asset allocation risk.

It just means you bring less cash to the lawyer or title company and allocate some of that into the Security Deposit account ... it's merely a virtual paper exercise.

Your other two options are solid options as well but it sounds like they require you to use your entire allocated amount of 40k.

So, it's really a subject opinion, a guess anchored in perception of economic benefits rather than any accounting allocation qualified to actual net amounts involving direct relationships with BP members.