If strict buying rules are followed, then a carefully selected property purchase could well prove to be a far better bet than managed funds.
Firstly, analyze whether its yield or capital growth you seek.
While it is wonderful to get both, in most cases you need to sacrifice either a low rental yield which in most cases will give you a higher capital gain in the long run, or a higher yield with a lower capital gain.
When purchasing units as investments, always be sure that the sinking fund is healthy and that there is no major work forthcoming.
Smaller blocks are usually a lot more attractive to prospective tenants, and make sure the area that you are buying in is not suddenly going to be bombarded by hundreds of new units which could force your rents down in the future.
Negative gearing in itself isn't bad, in fact it can be quiet valuable to investors in higher tax brackets. But please remember a tax deductible loss, is still a loss, so the property must appreciate in value at a reasonable pace to offset the accrued losses and eventually return a profit.
People are getting some real bargains out there at present. So get out there and put some lower offers in, and you might well be suprised with your result.