I think you are right to be looking for real estate. I bought a foreclosed home last year. Built in 2006 and I got it for just under $50 per square foot, after fixing it up. Rental income yields about 13% on my investment. I currently have offers in on 3 more, but 2 are short sales and they rarely work out. My target price is under $50 per square foot in an area that has a strong rental market. Unfortunately, I am out of cash to buy properties and have to use my home equity line of credit to make purchases. Still profitable, but riskier. Could pull cash out of either a Roth or IRA if I got into trouble with rates. Very difficult to get a mortgage on a rental property, and killer fees if you do.
If the Feds would loosen up restrictions on investing IRA money, and make it easier to purchase real estate for rental income, the housing market would bottom overnight. There are a couple of firms out West that will set up the legal framework to create an LLC that can act as a custodian for IRA funds that you can then use for real estate. Big fees, and looks a little questionable.