The best and worst reason I can think of for why people are attracted to investing in properties is leverage. For the typical person it is the only asset class

The best and worst reason I can think of for why people are attracted to investing in properties is leverage. For the typical person it is the only asset class where banks will lend and allow you to leverage an order of magnitude above investment. You cannot do that in a REIT. However you are right it increases risk and also you put in a lot more work. If you can afford the risk and have time, then great. If not, there are other ways to make money, as you point out.