I want to shift part of my portfolio away from stocks into real estate. I've found that if I bought real estate directly I could expect about 10% in yearly returns.
The problem with buying physical properties is that they are illiquid so if I invest $60K in some property I can't use them for anything else. And there is no guarantee I can even get any of the money back.
I also don't want to waste my time kicking people out, getting them to pay, etc.
Logically, I looked into REITs. They sound as if they have almost all the benefits of real estate with fewer complications. I can also lend their stocks for additional income and use them as margin.
However, they list a few risks that sound really fishy and I don't think I should be bothering about.
I can't see why a rise in interest rates should affect returns and face value in any significant way. They cite leveraging, but if they are using leverage, then returns should be far higher than what they actually deliver which is about the same as physical properties.
Is there any variety of REIT that works more like actual properties? Meaning it is only vulnerable to real estate prices and rental demand.