Which is better? Income fund(annuity) or income property?

Answering you question is not possible for two reasons. First, which is 鈥渂etter鈥?is subjective. It depends on an individual鈥檚 personal situation -- risk tolerance and goals. Secondly, you have blended two dissimilar items: an income fund is not an annuity.

In a nutshell:

Income property. The pros and cons: The owner will receive rental income 鈥?but may face interruptions to income when the property is vacant, or loss of income if the property is destroyed. Market conditions may or may not allow for adjustments to rental income. The owner may also experience market appreciation of the property 鈥?but may also experience market depreciation. The owner will have to maintain the property, deal with tenants and property taxes. They may get depreciation allowance to adjust their personal income tax liability.

Annuities are contracts between a person and an insurance company. It guarantees someone income for the entire life of the recipient, or for a defined period of time, depending on the terms of the contract. If the contract is for lifetime income, the pro is that the recipient will have lifetime income. However, there might not be an allowance to increase income in a way to keep up with the cost of living. If the annuity is for a defined period of time, the downside is that the recipient might outlive the income stream.

An income mutual fund may or may not be able to maintain a definite income stream. The net asset value (NAV) of the fund shares may go up in market value鈥攂ut I can go down too.

If you want greater certainty of income, an annuity is better. But it isn't very flexible. Once you buy a fixed annuity, you generally can't recover the money you invested in it, nor can you borrow against it. And if you die early, you and your heirs lose out.

If you want greater flexibility, a real estate rental property is better. It would be more work--you need to maintain and insure it, and deal with tenants (or the lack of tenants). But you can sell it if you need a pool of cash. You can borrow against it (but be wary of adjustable rate or interest only loans--a lot of people have been losing homes because of payment increases). When you pass away, whoever is designated in the title to the property (or in your will) will get the property.

Pick whichever option appeals to you.