Okay, stocks bonds or mutual funds. Which of the three is the better investment? That’s a question to be discussed between you and your financial adviser, but generally speaking, the sage advice is to not be too heavy in one particular asset class. Those who follow such advice will typically avoid major losses by diversifying. Today for example, stocks continued their slide and touched the 17,000 mark. Does it seem that long ago the Dow was flirting with 18,500? But of these three classes of assets, there is one that is missing. Real estate and private equity.

Residential real estate has not only recovered its lost value but lenders have also retooled their lending guidelines to more of a “make sense” approach and have tossed aside speculative lending. From apartment buildings to single family homes, real estate has provided its investors with double digit gains and the investor is secured with a first lien. Further, as lending guidelines for a primary residence have tightened over the years and follow a more uniform method of approving loans, this leaves many who wish to buy on the sidelines, at least temporarily. This causes an increase in demand for rental housing and that demand is reflected in higher rents in most parts of the country.

Private lenders also benefit by providing short term loans to individuals who wish to buy and rehabilitate investment property. When an investor sees a property that needs so much work a bank won’t place a loan on it, private lenders can evaluate the proposal and issue the funds needed to repair the property and prepare it for sale or rent. It is in this fashion that private lenders not only help the real estate market but achieve double digit returns in the process. So now the question is, which of the four are a better investment, stocks, bonds, mutual funds or…real estate?