As concentration of risk goes, you are probably best off investing in an area you know. You know where there are flooding or erosion risks, where parking is tricky or there are issues around a school, etc. You probably know it because you live there. It’s not necessarily a problem, but you are now even more exposed to the vagaries of one area.
Certainly, this could pay off nicely if you’re riding the right wave. But in some other markets, you could find that neither your primary home nor your rental appreciate as expected.