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).

You are calculating 5 cuts a day and thinking that is five hours, but don't forget maintenance time, travel time, breaks and allocation for bad weather.

But in principal I agree that you should allocate your money to the area that will give you the greatest return, regardless of whether that is paying off debt or investing in an asset that generates a return (adjusting for risk).

How should I split the allocation between houses given the implication of the note below?

This allowed me to re allocate my monthly funds.

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.

Since I do a lot of deals, I allocate money (my own and my investors) to different properties.

You are allocated only 24 hours in the day, and once those minutes are "spent", they are lost...never to be recovered.Time is a huge part of the "investing" part of REI.

However, your accountant should have already set it up when you placed the rental into service for purposes of depreciation and expense allocation.