This is probably a dumb question but I'm hoping someone can enlighten me. What are the advantages to having a rental property vs just investing cas into REITs or index funds? It seems like investing in the market is a more passive way of getting a similar return. Am I missing something obvious?
No, you're correct, and you're not missing anything.
Picking individual stocks offers an opportunity to find value investments with outsize returns and rapidly-growing dividends, assuming you can put the learning, time, & effort into it. Or you could just buy index funds to get most of the market's return with minimal effort.
Picking individual bonds offers the chance to buy dollar bills for 75 cents and possibly earn capital gains in addition to high interest rates, assuming that you can put the learning, time, & effort into it. Or you could just invest in a bond index fund to get most of the return with minimal effort.
A rental property gives you the chance to buy undervalued properties, rehab them, and rent them out for a highly reliable cash flow with the prospect of capital gains. Assuming that you can put the learning, time, & effort into it. Or, as you've pointed out, you could just buy a REIT.
If you have to ask whether you have what it takes to be a landlord, the answer is that you could probably read and learn and figure out to do it. But if you have to ask then you're probably not hard-wired to be a landlord, and it's better to buy a REIT.