Real estate has done quite well. (Photo: Taylor Hill, Getty Images)

If you’ve ever owned rental real estate, you know that the problems can outweigh the benefits. There’s taxes and building inspectors. And then there was the angry tenant who sold all your personal information to Russian hackers, followed by the discovery that Vladimir Putin bought 10,000 Ukrainian army uniforms with your MasterCard.

All of which may be one reason why real estate investment trusts, or REITs, are so popular. They offer you the chance to invest in real estate without having to deal with real estate agents, cable guys or Vladimir Putin. They aren’t cheap, but they’re a good way to get some income in these yield-starved days — and a good portfolio diversifier as well.

REITs buy and sell commercial properties: apartment buildings, office buildings, shopping malls — even self-storage complexes. By law, they have to pass nearly all their profits on to shareholders in the form of dividends. For that reason, they tend to have high dividends: Currently an average 3.13% a year for all stock REITs, vs. about 2% for the Standard and Poor’s 500-stock index.

Most REIT dividends are fully taxable at ordinary income tax rates, unlike most long-term dividends. Nevertheless, the difference in yields has long been attractive to investors who would like more than the pittance available from money market funds and bank CDs.

Mutual funds that invest in REITs have another charm, which is that they don’t entirely march in lockstep with the S&P 500. Sometimes this is good, as in 2003, when the Lipper Real Estate Fund index rose 32%, vs. an 11% gain for the S&P 500 with dividends reinvested. Sometimes this isn’t so good, as in 2013, when the S&P 500 soared 32% and real estate funds swooned 1.5%.

So far this year, REIT funds have gained an average 17.9%, vs. 9.5% for the S&P 500. Normally, such a disparity would make you think of REITs as wildly overvalued. I’d say you would need to look over a two-year period, says Edward Turville, manager of the REMS Real Estate Value Opportunity fund (HLRRX ), up 143% the past five years, vs. 121% for the average real estate fund. The return this year is just re-setting prices back to where they were in May of 2013.

Turville, a value investor, was happier when prices were lower. Currently, he considers the REIT market fairly valued and has let his fund’s cash position rise to about 13%, vs. about 5% normally. But that’s not to say he thinks the sector is about to collapse. It’s midcycle economics for real estate, he says. You have high occupancy rates that are getting tighter, and rents rising in every type of real estate, and a supply of new, unleased assets coming on at a rate that’s not catching up with demand.

Steve Brown, portfolio manager for American Century Real Estate (REACX ), generally agrees with that assessment. His fund has gained 18.8% this year. Prices are reasonable in the long term, he says. If we continue to get good earnings, the stocks will do fine.

His fund has been stocking up on hotel REITs (as well as hotel stocks, such as Hilton (HLT ) in part because they are one of the most logical beneficiaries of rising employment. Group business at hotels — large bookings from groups of eight to massive conventions — has gained 4.5% this year. Those bookings not only increase occupancy rates, but flow through to earnings from hotel restaurants and bars as well. One favorite: Pebblebrook Hotel Trust (PEB ), which owns but doesn’t operate hotels.

Another favorite: apartments. Rents are rising faster than inflation, Brown says. The basic case: Even though the housing market is recovering, entry-level housing is sluggish because of slow wage growth and the difficulty of getting a mortgage. And the younger age cohort, those from 22 to 32, is an enormous group at the point in their lives where they are most likely to rent an apartment.

What could go wrong with REITs? Both managers say they expect a rise in interest rates would hurt the group initially. But if rates are rising because the economy is growing — rather than, say, an effort by the Federal Reserve to snuff inflation — then REITs should rebound nicely.

Turville likes sell-offs because it means he can get stocks cheap. If REITs sold off, We’re likely to buy into that, he says. There are a dozen stocks in our portfolio we’d like to own more of if we get more attractive pricing.

If you’re a long-term investor, you might consider adding some real estate funds to your portfolio. The top-performing funds are in the chart. But you shouldn’t overlook real estate index funds, which ditch the manager and offer rock-bottom expenses — one of your biggest advantages over the long haul.

Vanguard REIT ETF (VNQ ) is the largest of the exchange-traded real estate fund. It charges 0.10% a year in expenses. The fund is up 21.4% this year and yields 2.97%. Schwab US REIT ETF (SCHH ) charges 0.07% a year in expenses, and has gained 21.6% this year. Yield: 2.25%.

Owning a REIT doesn’t have the charm and character of, say, owning a brownstone in Brooklyn or a Victorian in Vancouver. On the other hand, you’ll never have to fix a faucet. And selling it is always one click away.