You know that the minibar at a $200 hotel room is stocked with Aqua Velva if you've been to New York City recently.

The upside to pricey hotel rooms: investing in a company that rents them. Real estate investment trusts, like hotel rooms, aren't cheap - but they can provide some decent investment income and modest gains, if you choose carefully.

Real estate investment trusts, or REITs, invest in commercial properties, such as hotels, shopping malls, apartment buildings and office space. Real estate mutual funds, which invest mainly in REITs, have soared an average 139%, compared with 21% for the average stock fund and 10% for the Standard & Poor's 500-stock index.

On the other hand, REITs tend to pay excellent dividend yields - now, about 4.8%, according to the National Association of Real Estate Investment Trusts, a trade group. Developers turned other potential hotel sites in New York and elsewhere into residential housing, then the hottest part of the real estate market.

Commercial real estate may not be as sensitive to interest rates as residential real estate, but let's get real. Higher borrowing costs can still crumble the REIT market. A 4.8% yield is high for stocks, but most investors buy REITs for income. Unless you plan to pick your own REITs, it's probably best to invest in a real estate fund. Right now, a $1,000 investment in a real estate fund will cost you less than a few days in a major city hotel.

By M. Sese
http://realestatepress.org