But if you are OK with that, then you can enjoy certain advantages, such is much better diversification across properties, geography, etc.

In addition, the above table makes a good case for diversification.

I have very little in this bucket compared to my real estate holdings but some diversification into long term companies in the stock market is probably good.  

@Andrew Briones In general, diversification is always better than putting all your eggs in a single proverbial basket.

You'll still need to do the proper research and employ other strategies such as asset diversification and risk management if you want to maximize your returns.

I ended up buying 6 properties around Australia in growth areas with good rental returns and have a good amount of diversification (I am in 3 different states).

“Diversification is protection against ignorance, it makes little sense for those who know what they’re doing.”

.* Generally have higher gross rent yields (admittedly expenses can be higher due to common utilities and common area mainatenance, offset by economies of scale over time)Once I have 7 or 8 conventionally financed multis (mostly 2 and 3 BR units to avoid transients as much as possible, and to capture large Section 8 allotments), I plan to focus on SFRs for buy-and-hold, using local bank financing.Advantages of SFRs:* Greater rental demand, quicker tenant placement * Longer tenancies typically* Better resale options, including O/O buyers* Tenants pay all utilities, maintains yard* Can rent under lease-option if desired* Less concentration, more diversification* More liquid; if cash needed can sell one houseDoes this seem like a reasonable approach?

First, you need to know that my goal has never been to replace my full-time job so I have a bit different perspective than you may have - I have a good job that I enjoy and RE is merely a place to put some extra money for me for diversification.

Right now, you should concentrate on building your real estate investing business and worry about the other stuff when the time comes.Some argue for concentration because they get the best returns and I say to each his/her own but the 1980's taught me how quickly the rules can change so I favor diversification.