Yeah...I may DEFINITELY be in need of some education about REITs, but here is how I see it.
If I want real estate exposure I'll buy real estate to rent out (not live in).
To me, REIT ETFs give me STOCK exposure. They may be more in favor or out of favor than SPY, for example, during certain periods...but overall...REITs and the overall market go up and down together. So for me, I don't really see the "diversified into real estate" angle. I may be getting a few more points of return when REITS are in favor, but I equate that with a sector play in general versus truly 'diversifying into real estate.' On the other hand, if I buy a rental property in a highly desirable area (EX: a) filled with high income professionals ; b) nice weather ; c) land-locked -- nowhere to build ; d) growing population), the price of that underlying property will typically not tank by 38% during a market downturn like what we had in 2008-9. Half of that? Yeah perhaps.
I don't own REITs right now. And I don't own rental properties right now.
But again, I'll buy into REITs when the overall stock market is smelling like a chicken coop....because it can be an attractive sector play when held in a retirement account.