I’m just not really comfortable with the volatility at my age (60)...so my plan is to make a 12-15 per cent return on real estate, then invest in annuities(3.7) and perhaps be able to average the norm for the market 8 per cent without ever entering the stock market!! 

Investor saturation has artificially driven prices up in so many midwestern markets and the major hubs, and the nature of that growth (although positive in trend) comes with volatility.

The idea is to limit exposure from underwriting potentially volatile income associated with tenants that don't have as much skin in the game.

Is it consistent and not tied to the news cycle volatility of the stock market? 

If you realize that you take a serious emotional toll if your portfolio value goes up and down, you need to asset allocate more to less volatile instruments like bonds. 

A more sophisticated way is a laddered income approach that combines fixed income sources like annuities and social security, followed by things like rental income which is somewhat predictable and not tied as much to volatile markets, dividends, bonds and then equity withdrawals.

So, absent a true crystal ball, what is a PRUDENT real estate investor to do in this potentially volatile and downward environment? 

I paid the roofing contractor half up front but he returned it because he will not go do the work with this volatile tenant in place.

One thing I see that is missing is penny stocks which I imagine are more volatile but may provide a better return and also option trading which seems to complicated to me anyway.

They have actually experienced the volatility of their jobs so they are scared themselves to buy a house out of fear the market will crash right after.