rental property or property listed trust

looking for a rental property, have access to borrow 200000. Can only find reasonable properties in rotorua that will yield 6% net. Not enough for the risk and no allowance for depreciation. I could buy 200000 worth of a spread of listed property trusts that will yield much higher. Have I missed something?

Do not borrow to buy LPTs. They are already geared.
On a five year horizon are the properties in the listed trusts going up or down? What will happen to the alternative rentals?
With LPTs the gearing is already built in. They have already taken care of their banking covenants. How would you deal with borrowings on rentals?
Do you relly want or need contact with tenants?

so would i be better off to select a number of high paying dividend stocks than LPTs

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Originally Posted by loofa

Do not borrow to buy LPTs. They are already geared.

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But they're not highly geared at all. Certainly nowhere near the level most res. investors seem prepared to stretch too. Given the massive discount to NTA of some of he trusts, gearing might be a good strategy; but purchasing any assett is risky and gearing will always make it more-so.

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Originally Posted by fungus pudding

But they're not highly geared at all. Certainly nowhere near the level most res. investors seem prepared to stretch too. Given the massive discount to NTA of some of he trusts, gearing might be a good strategy; but purchasing any assett is risky and gearing will always make it more-so.

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I agree but they do have various ratios imposed on them by lenders.
This means their gearing is lower than for a direct investment.
I do have some on CFDs which means only 15% capital is committed so 85% geared. BUT it also means that I can get out immediately or set a stop to protect basic capital.
However I also do not use stops with CFDs as the providers have a habit of bombing you. It is better to allow for the slippage by having good cover.