You can mitigate it a ton, but it is still more risky vs LTR.

Verifying they have not stolen someone's identity is pretty easy and common practice for a professional Landlord.Don't take offense; it's business and our business is all about mitigating risk.

So I structure a deal where I am levering for whatever amount of downpayment and pay-off period where I am revenue neutral on the properties and reducing principal at the fastest pace possible.Being experienced as an investor and having my share of both good and bad decisions and deals in my past, I understand that these deals will actually lose money with maintenance and vacancy events during the 5-7 years until they are paid off so we take steps to prevent and mitigate the chances of those types of events.  

Not sure how this suddenly becomes disputable except perhaps this being not the most popular fact on a rei forum:)They are two different animals for sure but at the end of the day the passive paper animal covers the rock and wins.Your "academically proven fact stocks beat rei on average," is premised only on asset values plan and simple.There is no consideration to:- equity creation- market efficiencies- accessibility- control- tax advantaged returns and asset transferability- cash flow- leverage- risk mitigation- etc.If the point is to compare two peices of publicity in a narrow view negating all other factors from arm chair Ivy league people who may or may not have ever invested  then sure stocks beat REI.I've traded equities beyond these index comparisons with options via speculation, income strategies, shorted positions, and other strategies but the reality is it takes a lot of tracking, waking up early mornings, setting up and constantly modifying your software, and more brain damage then REI if.

No single market will have everything you are looking for, anyway, so why not diversify geographically to mitigate risk?

Part of the process of becoming experienced in real estate investing and doing well involves risk mitigation.

So at the end of the day, you are paying $400 a year to mitigate the 5% chance of $400 repair. 

There are entrusting the HML, typically a licensed firm or individual, to use their marketing to find the borrower, process and underwrite the loan, prepare docs that are in Federal and State compliance and normally select the loan servicer (although a few will sell whole loans to investors who intend to do their own servicing, mitigation and oversee foreclosure, if necessary.A few investors want to buy notes but not be in the business.

It's been a shock to me the level of effort one has to take to mitigate the risk of contractor ethics.

we can't predict the future but there are ways to mitigate the risk.