While the housing market remains in the doldrums, some real estate related stocks are not necessarily terrible investments these days. Investors just need to look outside the traditional housing industry. Whether it's a quality balance sheet, prudent management or a unique set of assets, not all businesses are the same.

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What to Avoid
A heavily indebted builder like Hovnanian (NYSE:HOV) or Beazer Homes (NYSE:BZH) is not an intelligent way to bet on a housing recovery. In the past five days, shares in HOV jumped around 35% on news about ways to fix the housing mess. Yet, with no tangible equity and debt of approximately $2 billion and $1.7 billion, HOV and BZH are nothing more than a speculative bet on housing. At times speculation can pay off big, but very few market participants are able to speculate profitably. It is not a coincidence that homebuilder NVR Corp (NYSE:NVR) with significantly less debt has actually been a decent investment to hold throughout the real estate crisis. In the past year, NVR shares were down about 5%, below the flat return for the S&P but outperforming all other homebuilders by a significant margin. Trading at around $706, NVR is not far off from its 52-week high of $804.32, whereas most other homebuilders are significantly down from any type of 52-week high price. (For related reading, see Will Corporate Debt Drag Your Stock Down?)

Better Options
While traditional housing related stocks may not be the best securities to own, some pockets of real estate look promising over the next few years. One in particular is Brookfield Office Properties (NYSE:BPO) is a high quality real estate management company. BPO owns and manage some of the world's most iconic real estate assets. Its portfolio is comprised of interests in the downtown areas of New York, Washington, D.C., Houston and Los Angeles, as well as major international cities including Toronto, Canada and Sydney. Some of Brookfield's landmark properties include the World Financial Center in Manhattan, Brookfield Place in Toronto and the Bank of America Plaza in Los Angeles. Shares trade for about $15, yield nearly 4% and trade at a P/E of less than 4. Over the past year, Brookfield has been selling some of its trophy assets at attractive prices and using the capital to take advantage of the incredible valuations in today's real estate market to providers of liquidity. (To learn more, read P/E Ratio.)

The Bottom Line
While no real estate related business is immune from the current anemic state of the industry, patient investors can find businesses that are opportunistically taking advantage of a depressed market. Those willing to have a little patience may not find all real estate related opportunities to be value destroying. (For additional reading, see Simple Ways To Invest In Real Estate.)

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At the time of writing, Sham Gad did not own shares in any of the companies mentioned in this article.

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