"Not all REITs are created equal," notes Richard Lehmann, who looks at the Neuberger Berman Real Estate Income Trust (NYSE: NRO) in his The ETF Trader.

"The decline in Real Estate Investment Trusts (REITs) has been sharp, reacting to the mortgage crisis and the associated financial meltdown. However, here are sectors of the real estate market that have not been affected by the mortgage crisis.

"Such sectors like health care and multi-family projects and self-storage buildings are relatively less sensitive to the economic cycle. In addition, these sectors may have an inverse benefit from foreclosures such as rental properties and self-storage.

"The Neuberger Berman Real Estate Securities Income Trust fund invests in REITs in defensive areas such as health care and multi-family projects. Common stocks of REITs are trading at a discount to the properties they own, a reversal of premiums evident in last year.

"This closed end fund trades at 9% discount to its net asset value. In essence, a shareholder gets a portfolio of REITs that trade at a discount to their real estate value at another discount. In addition to the double discount, the fund yields an astounding 24.89% paid monthly.

"The fund trades at $7.38 versus its net asset value of $8.11. Should the real estate market see a decline, fund holders are doubly protected by the high yield and double discount. The fund's top holdings are Ventas Inc. (5.7%), Omega Healthcare Investors (4.8%) and Nationwide Health Properties (4.8%)."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Despite large and growing declines in both the commercial and residential real estate markets, one part of the real estate sector is having a good year. Self-storage companies, which are often structured as REITs, are posting some good numbers. Face it, American's have way too much stuff and not enough space to store it at home. Americans move, go away to college, get divorced, join the military and/or lose their homes in foreclosure with alarming regularity. All of these life events require short-term storage. According to a survey in Investment News, self-storage REITs have generated total returns of 20% or more YTD. This compares very favorably with the 5% or more drop in the S&P 500 stock index YTD.

A snapshot of the sector shows four of the largest self-storage companies on the upswing. Sovran Storage Incorporated (NYSE: SSS) at $40.88 is up 1.95% YTD. Most other self-storage REITs have more impressive returns. Extra Space Storage (NYSE: EXR) at $15.11, up 6.90% YTD. Public Storage Incorporated (NYSE: PSA) at $83.55 is one of the most expensive self-storage stocks. It is up 7.59% YTD. The bargain in the self-storage sector is U Store It Trust (NYSE: YSI). At $11.54 the stock is up a whopping 28.82% YTD. Investors should call around to self-storage companies in their areas. Chances are they will not find many vacant units.

Checking on one of my big calls of the year:Newcastle Investments (NYSE: NCT), which is down significantly so far through mid June, it is nice to see that a dividend will be paid for this past quarter of $0.25 per share. This amounts to a current yield of over 12%.

I started writing about NCT last November when I posted Chasing Value: Newcastle's 21.9% yield too good to be true?.

In late December I made it one of my Chasing Value: Final list -- 8 stocks for 2008.

Some would say it was to good to be true as the stock price drifted downward and the dividend was cut. I maintain that this is just a waiting game until the real estate market migrates back to a more sure footing while you collect a healthy dividend.

Most advisers would remind investors not to try and catch a falling knife and I would agree, but at some point there is real value and I have taken several "stabs" at this one trying to dollar cost average while a I wait.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of NCT.

I recently read an excellent book that makes the case for a long-term bull market in student housing: Michael Zaransky's Profit By Investing in Student Housing: Cash in on the Campus Housing Shortage.

Unfortunately, many investors lack the resources (time and money) to pursue investments in condos/apartments etc. but Mr. Zaransky writes about another possibility: a trio of publicly-traded REITs that specialize in student housing. There's American Campus Communities, Inc. (NYSE: ACC), GMC Communities Trust (NYSE: GCT), and Education Realty Trust, Inc. (NYSE: EDR).

There are compelling arguments that student housing will prosper because of a shortage of dorm space and an increase in the college-age population and the percentage of people who attend college. Student housing may be more resilient/less tied to broader economic trends than the rest of the real estate market.

All of the REITs mentioned above sport dividend yields over 5%, and may be worth a look for investors seeking real estate exposure.

"A decline in home ownership is good for companies who have apartments to rent," notes The Dave Dyer Newsletter. To benefit from this trend, he looks at Avalon Bay (NYSE: AVB)." Here is his review.

"After a 10 year period of consistent increases from 1995 to 2005, the trend toward increasing home ownership has reversed and is now clearly in decline. The subprime problems and tighter credit policies will only serve to increase the decline.

"One of the easiest ways to invest in this trend is to buy shares in a REIT that owns apartment properties. Avalon Bay (NYSE: AVB.) is a REIT that manages high quality apartment communities in the high barrier-to-entry markets like California, the Pacific Northwest, the Northeast and Mid-Atlantic.

"In some cases, they develop their own properties; in others, they buy and remodel existing apartment complexes. They currently own 182 properties with about 52,000 apartments in total. AVB has 19 more properties under constructions and development rights for another 52.

We now own Newcastle Investment Corp. (NYSE: NCT), a CMBS lender and REIT paying about a 26% yield in several portfolios. It does not own real estate, instead it holds loans on nonresidential properties.

NCT is on record to fully fund its dividend and anticipates one billion dollars in loans to be paid off in the coming year. It is one of my 8 for 2008. See original full story: Chasing Value: Newcastle's 22% yield will reward patience.

The stock has lost two thirds of its value from its 52-week high and closed at $11.08 yesterday down further from my initial buy-in. The stock is down because of investors fears about the real estate values supporting the loans and the resemblance to residential mortgage brokers and lenders that have collapsed or suffered great losses. Neither of these issues are of concern to me. I am active in the commercial real estate markets and we have not seen appreciable reductions in the value of existing commercial and industrial property.

Many people believe that the bursting of the housing bubble was a prelude to a far-reaching property bust, and that few segments of the market will ultimately be spared.

Indeed, reports indicate that the commercial property market, which held up relatively well amid the early decline in home prices, is now in trouble and seems headed for a potentially nasty spill.

Given that, I thought it might be useful to go back and look at the pattern of the S&P 500 Homebuilder's Index in the run-up to the July 2005 peak and beyond, and see how that pattern compares to the recent price action in the Dow Jones Equity REIT index, which is made up of publicly-traded real estate investment trusts.

It's no secret that the entire real estate market in the U.S. is suffering. For investors owning REITs, we are in the midst of a year of real pain. For long-term investors, some opportunities have arisen in the REIT space.

With people unable to get mortgages, the rental market has proven to be quite strong. Either from people who sold or forfeited their homes, to people who won't qualify for a mortgage, to higher end buyers who believe prices will continue to fall -- everyone still needs living accommodations. That's why I think the market has it wrong with some of the REIT sectors.

REITs dealing with rental markets should be strong, but, alas, their stock has gotten slammed just as bad as everyone else's. It's a classic case of throwing the baby out with the bathwater.

My top pick in this sector is AvalonBay Communities (NYSE: AVB). AvalonBay develops, acquires, refurbishes, leases, and manages apartment complexes. The stock is down over 40% over the last year and currently sports a nice dividend yield of 3.9%. I think long-term investors will be richly rewarded on this stock.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/14/08.

Although short selling -- the practice of selling borrowed shares with the hope of repaying the loan by buying back the shares at a lower price -- goes against the American belief that stocks always go up, I have long been fascinated with it. Short Stories discusses what works, what doesn't, and what some of the leading lights in shorting stocks think about its opportunities and threats. I describe possible short trades and seek your comments and questions for story ideas. I don't offer any investment advice and I don't trade on any of the posts I write.

Alesco Financial (NYSE: AFN) looks like it will have trouble coming up with the money to repay its debts. This Real Estate Investment Trust (REIT) uses borrowed money to buy into the alphabet soup of securities -- such as Collateralized Debt Obligations (CDOs) and Mortgage Backed Securities (MBSs) -- that could cost Wall Street up to $400 billion in write-downs. With 22% of its float sold short, many investors have already figured out that Alesco, at $3.28, is on life support. But it pays a 31 cent a share dividend, for a 9% dividend yield -- 36% if it was annualized (but I doubt Alesco will be able to continue to pay it) -- which those short sellers are willing to pay because they think the stock has further to decline.

The question about whether to sell short this stock revolves around whether Alesco can pay off its $11.2 billion in debt. Here are some factors to consider:

• Debt repayment. In its most recent annual report of March 2007, Alesco said it was on the hook to repay $3.6 billion It owed in less than a year and then nothing in the intervening years and in more than five years it would owe $6.8 billion. If it has already paid off the $3.6 billion it could be OK. But its most recent quarterly report said it had $91 million in cash so if it owes more than $91 million in the next few months, it could be in trouble. And it's already dedicated $19 million of that cash to dividends.

A piece in The New York Times look at the increasing willingness of investors to get creative with their IRAs. Consider this amusing example:

BRIAN HARRIS makes a 30 percent annual return on his Roth individual retirement account, but his money is not invested in a soaring biotechnology stock or a hot currency fund.

Instead, Mr. Harris, a music teacher from Tucson, owns about 25 marimbas, xylophones and timpani. Using the money in his retirement account, Mr. Harris buys the instruments for less than $1,000 each. He then rents them to his students for up to $60 a month. The rental income flows straight back into the I.R.A.

Hmm .... While that sounds tempting, there are ample reasons for most investors to avoid these self-directed IRAs. For starters, you're unlikely to be able to achieve much diversification owning traditional real estate or similar assets in an IRA -- If you want real estate exposure, go with a portfolio of REITs. The idea of investing in racehorses through an IRA seems insane. This is supposed to be your retirement money!

The best bet for an IRA remains low-cost index mutual funds. There are plenty of places for more speculative and creative investments -- the IRA isn't one of them. In addition, unless you have a ton of money in your IRA, the transaction costs of alternative investment will probably be prohibitively high.

If you've been following the daily headlines about the subprime crisis and the deflation of the housing bubble, you know that you would have to be completely out of your mind to invest in real estate.

And that may be the best reason for giving it a look. REITs are down more than 7% this year and, according to a piece on MarketWatch, a lot of funds are trading at discounts of around 20% to their net asset values. This is an indication of pretty negative investor sentiment, probably a result of headline shock.

Redemptions in U.S. real estate mutual funds are moving at a $260 million a week clip. Giving the tendency of individuals to be horrendously bad at timing the market, this is a strong contrarian indicator: Be greedy when others are fearful.

Use ETFConnect's Find a Fund search page to explore the options in REITs.

The Forbes/Slatin Real Estate Report, edited by industry expert Peter Slatin, is a professional-level newsletter geared to the more sophisticated real estate investor.

Along with his own insights and advice on investment opportunities in the sector, one feature of the service is its monthly interviews with REIT-sector equity analysts. Below, I share some highlights from Slatin's interview with Jordan Sadler of KeyBanc Capital, who discusses some of his current favorite ideas among REITs.

FORBES/SLATIN: KeyBanc is focused on the U.S. What are you seeing here?

SADLER: My view, initiated last October, was a cautious outlook overall. The recent M&A squeezed shares. We continue to feel that way. REITs are trading at a level where it's hard to justify incremental investment across the space, although you can be tactical with names that are more attractive.

FORBES/SLATIN: In your universe of tactical moves, what stands out?

SADLER: Our top pick was Digital Realty Trust (NYSE: DLR), and it continues to be. It has fundamental drivers that are significantly differentiated from most of their REIT brethren. That, in theory, should be able to generate excess profit until competition gets hip, which seems to be slowly happening. For their type of building, there is limited supply, and a ton of demand, from financial services, Internet and enterprise companies and channel users.

There are mountains of cash out there and it is putting huge pressure on the real estate market -- driving up the cost of industrial, commercial and retail properties. The housing market may be hurting badly, but that's homes and condominiums only - because apartment buildings are attracting plenty of investors too.

In the past six months I have looked at no less than a thousand properties in the western United States and could not find anything worth buying. It must be just me, cause plenty of investors are buying property at cap rates between 3 and 6 everywhere. I don't know if it's just the abundance of OPM (other people's money) out there that is burning a hole in investor pockets or I'm blind to the values and just missing out. Perhaps all this property is going to appreciate greatly in the next few years and I don't see it.

Perhaps it is me because I tend to pass over thousands of stocks too, before being satisfied any one of them is worth buying. Interestingly property has been changing hands at a faster and faster pace in the last few years so things are being bid up. Another factor may be investors' bearish sentiment about the falling dollar and the possibility of inflation hiding around the next corner so they seek tangible hard assets and are willing to accept smaller returns. One theory suggests that foreign money from places where cap rates are traditionally higher, combined with their currently strong currencies make our real estate market a bargain. This seems like a probable cause to some degree.

I also wonder if all the stock buybacks, company buyouts, and new capitalists in China, India, Russia and Eastern Europe plus the folks with cash from oil countries are just creating hyper demand the past few years.

All I can do is stick to my guidelines, continue to be patient and watch for an opportunity. Investing in properties without a return higher than a treasury note is not something I am going to do.

Those of you who are new to BloggingStocks.com can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.

Not so long ago, real estate was the hottest thing going. A slew of TV shows about "flipping properties" sprouted, and it seemed that everyone knew someone who was getting rich in real estate. Now, the market has cooled off, and it seems that very few people are seeing real estate as the place to make a quick buck. But the Wall Street Journal's Jeff Opdyke thinks that investors may be able to find opportunity in Real Estate Investment Trusts (REITs), many of which have been beaten down badly in recent months. This may be an interesting contrarian play:

New money going into mutual funds that own real estate has plunged to just $2 million a week, on average, from nearly $400 million a week as recently as mid-February, according to AMG Data Services. Investors in droves are also selling off their shares in real-estate investment trusts, the publicly traded stocks of companies that own everything from apartment buildings to medical centers and shopping malls.

I'm skeptical about REITs. According to this fascinating piece from Forbes, REITs are yielding 4% right now, roughly half of what they paid 7 years ago, when old-fashioned stocks were all the rage. Because these trusts must pay out 90% of their income as dividends (by law), there is little room for earnings growth, except in the form of rising property values and rental rates.

This bring us back to one of the fundamental laws of good real estate investing: Real estate investing is about cash flow. Real estate speculation is about growth in property values. With the yields on REITs averaging 4%, they look pretty speculative to me.

In a piece in Friday's USA Today titled "There's still room for real estate funds to roam," columnist Jack Waggoner made the case for investing in real estate investment trusts (REITs). To his credit, he did point out that current yield on REITs of 3.78% is an all-time low for the funds since the National Association of Real Estate investment Trusts began tracking them in 1971. While he makes a good case for REITs based on the strength of the economy and the influx of new money, I won't be investing in the funds any time soon. Here's why:

The yield of 3.78% on REITs is less than 5.25% that you can get in a savings account from Emigrantdirect.com. By law, REITs must pay out at least 90% of their taxable income back to shareholders as dividends, and many of these funds have payout ratios over 100%, meaning that they aren't earning enough to cover their dividends. So these funds will not be able to grow organically by reinvesting earnings (they're paying it all back to shareholders). Their only means of growth will be taking on additional debt (many of these companies are already heavily leveraged) or seeing a rise in property values and rental prices for the properties they currently own and manage.

In essence, REITs, which were once a source of income, are now a speculative bet on a rise in real estate prices. The fact that the earnings are returned to shareholders (and taxed) makes them, in my opinion, and inefficient way to speculate on a real estate resurgence. Instead, I would look to home builders and supply companies that will benefit from a bull market in real estate. I think they have a good chance at outperforming REITS.