First of all you're talking about a diversification exchange. 

This is especially acute if the town where one invest has no diversification in employers.

Such plans would allow the retirement plan itself to diversify into real estate, but it is simply that - diversification. 

Most duplexes that aren't in need of major cosmetic and functional repair are creeping towards the 400-500k mark and I'm not sure the rents justify that price point.Ideally I would like to have rental property as part of my portfolio as diversification and of course the cash flow is great too.

Would the lack of diversification in another area be a detriment?

Atlanta has been market that has seen great growth in areas like jobs, job diversification, rent growth, population growth.

Aside risk diversification, is there any special reason for this?

or would you first prefer to own your properties and then maybe do syndication as a way of diversifications?

And I feel the ideal portfolio can benefit from the diversification of both.Directly owned properties are great because they give you maximum control and the ability to tweak them exactly how you want.

There are many niche areas but I favor MF apartments as a core REI syndication holding as well as diversification into self storage and mobile home parks as well may be an option.