If you didn't diversify, when the market has a prolonged downturn, you will eat up your principle using that money to live and then not have enough to generate the returns you need when it picks back up. 3.

Secondly, who cares what the ownership splits are if the gain can't be realized because the values are propped up/can't meet projections, the sponsor cannot execute on the business plan or the fee structure severely eats into the distributable cash when the realization event actually occurs.

The disadvantages of it are that the risks you're taking (and that I outlined in my original post) and the fact that it's gonna take more time until you can earn some rental income.I don't know about you but, if I can, I like to have my cake and eat it too.

Taxes when they get reassessed to reflect the purchase price can eat away at your cashflow. 

Two, taking on more than you can eat. 

I'll continue eating my popcorn, deleting emails, and looking for off market opportunities.

Tenant turnovers eat cash flow.YMMV.

No eating out.

Though the down payment and closing costs will not be huge, they will eat up a sizable portion of our savings.

Unfortunately once you head into the suburbs the higher taxes really eat into cash flow.