The residential property market has been one of the most attractive places to be invested in over the last five years.
However, prospective buyers could be disappointed with future returns if they buy today because the market appears to be cooling yet the potential rental income yield is so low.
If you still want exposure to property perhaps the best strategy would be to buy real estate investment trusts (REITs) on the ASX. Commercial property offers good income and potentially good capital growth too.
Here are three of the better REITs on the ASX in my opinion:
Arena REIT No 1 (ASX: ARF)
Arena's main focus is owning childcare centre properties and leasing them to childcare operators. Some of its biggest tenants include Goodstart Early Learning and G8 Education Limited (ASX: GEM).
Management have successfully grown earnings and the distribution at around 10% a year over the last few years and is expected to keep growing strongly over the next twelve months.
It's currently trading with a trailing distribution yield of 5.41%.
National Storage REIT (ASX: NSR)
National Storage is the largest self-storage provider in Australia with over 115 centres.
The rising property prices has made the value of National Storage's units both more valuable and more attractive to users.
National Storage continues to expand its network which is why the current distribution yield of 6.03% could keep growing.
Cromwell is the riskiest of the three REITs on my list but it also has the biggest yield.
It owns commercial properties and leases a larger percentage of its buildings to government entities compared to most REITs.
Cromwell currently has a trailing distribution yield of 8.83%.
Foolish takeaway
All three businesses could be good ways to boost an investor's income. At the current prices, I think Arena would be the best buy due to how fast it is growing earnings and its distribution.
However, rising interest rates could be a big negative over the next few years for REITs which would increase the loan interest cost and decrease the value of the properties.
