But definitely interesting the added income diversification that an Airbnb rental might produce.

In my opinion, keeping the home and getting that HELOC out would allow you to have a future asset which an increasing rental market (more potential cash flow), give you funds to proceed on your next deal and invest, and the diversification in your portfolio to shield you from some market risks. 

If I were non-accredited, I would personally start with Blackstone BREIT since it has more diversification...and then perhaps diversify into StREITwise

The closer you get to Boston, the more you are competing from an investor standpoint with investors who are seeking portfolio diversification and appreciation -- both of which increases costs.In my opinion it comes down to you what you're looking for.

The potential partners I have been talking too also like the diversification of holding less stocks and the stability of real estate prices, at least in our are, compared to stocks also. 

I keep my eyes out for deals in Midland but haven't pulled the trigger between cost of entry and attempting to keep some diversification since my W-2 job is oil/gas related which closely matches housing market in Midland. 

Diversification is good.

And as others have stated, it is a good idea to have some diversification. 

I would buy two 100K properties instead of one 200K property as it gives me diversification.

The short answer is yes, diversification is a good thing