But there is one investment that continues to yield a solid return despite the ailing economy--multifamily rental housing. The reason is the downside protection offered by a steady flow of rental income. No matter how bad the economy gets, people still need a roof over their heads, and rent will come ahead of car payments, credit card debt and other financial obligations.

Indeed, the more people who are forced out of their homes by foreclosures, unable to buy a home due to tight credit or unwilling to buy a home due to uncertainty about the future of the for-sale housing market, the greater the demand for rental housing. Moreover, the New York/New Jersey metro area's dense population continues to fuel demand, and that population has some of the highest household incomes in the nation.

Because of this demand, we continue to see a large number of apartment house deals, and we see no prospect of the demand abating. Although credit remains tight, interest rates are at an historic low for borrowers with good credit, enhancing their ability to purchase such properties.

In 2007, for instance, multifamily investments yielded an average annual return of 16%, compared to 11% for Standard & Poor's 500 Index and 13.7% for the NASDAQ Stock Market, according to a study by the National Association of Real Estate Investment Trusts. And that was well before the stock market took its recent nosedive as a result of the credit crunch.

Multifamily also holds more appeal than other types of commercial real estate investments because of the downside protection. As some owners point out, if they lose a tenant or two they lose a few hundred dollars a month, as opposed to an investment in industrial or other commercial real estate in which the loss of a single large tenant can result in large financial losses.

A recent survey of more than 400 top executives in commercial real estate conducted by the law firm DLA Piper found that 50% ranked multifamily as the most attractive commercial real estate investment. In New Jersey, the rental market was recently described in the New York Times as "vital" and "trending upward." The overall occupancy rate is 97% and rents are rising at an average of 4% to 7% a year, depending on the analyst, the Times reported. This demand is being fueled in part by bargain-seeking renters emigrating from New York and Philadelphia, where rents are considerably higher.

But investing in multifamily housing offers other advantages besides a solid return. In this economy, the most important may be its tangibility. In contrast to equities, whose value may evaporate, leaving investors with little more than a piece of paper of virtually no worth (witness Lehman Brothers and Washington Mutual), investors in multifamily housing have the security of knowing that a deed represents a tangible asset in the form of the structure and the land it rests upon.

Indeed, investors in economically depressed parts of the country are being drawn to the multifamily market by the fact that selling prices represent a fraction of the value of replacing the buildings. While that isn't the case in this metro area, where demand for multifamily properties continues to shore up prices, investors nonetheless have the reassurance of knowing that they are putting their money into bricks and mortar rather than an intangible asset such as a stock certificate.

Another appeal of multifamily is that of control. While investors in equities have little control over an investment in the hands of professional managers, investors in multifamily have the ability to affect the return on their investment. Indeed, some of the greatest investment opportunities lie with the acquisition of down-at-the-heels properties with good upside potential. As a result of good management--and often, sweat equity--investors can improve their properties, resulting in increased rents and value.

The potential to thus improve the value of their investment holds great appeal for investors. In fact, many investors now at the helm of extensive real estate empires launched their careers with the profit from the improvement of a small rental property, which they then reinvested in another property, repeating the cycle again and again. Few other investments offer such an opportunity to build a legacy for future generations.

Indeed, the hands-on appeal of multifamily housing is greater than ever, thanks to a 70-million-strong baby boom generation that, despite entering retirement age, may not be ready or able to fully retire. Many members of this generation view owning and managing a rental property as a means of keeping their feet in the workaday world without the restrictions of a 9-to-5 job.

While dealing with tenants does have its negatives, for many baby boomers the opportunity to interact with people on a day-to-day basis, as opposed to merely sitting passively on a stock portfolio, or even worse, enduring a white-knuckle roller coaster ride, is one of the most rewarding aspects of their investment.

Although home real estate prices are down in parts of the New York metro area, they are still relatively high compared to the rest of country, which might lead prospective investors to wonder if opportunities still exist in multifamily. The answer is a resounding yes. While class A properties--well-maintained properties with ample amenities in desirable neighborhoods--may not allow investors to make a killing, they still yield a solid return, and B or C class properties in less desirable areas can offer upside potential and higher returns.

The population shift back to urban areas--being propelled by higher gas prices, improved public transportation and a lack of available land in outlying suburbs--offers opportunities for those willing to invest time, money and effort in multifamily. Many older properties with 10, 20 or 30 units still exist in cities and inner suburbs that, with TLC in the form of fresh paint, new windows, improved landscaping and kitchen and bathroom upgrades, can be transformed into stellar performers.

We continue to close deals, and with the economy appearing as if it will remain in the doldrums, a new class of potential renters is arising that should fuel the demand for rental housing for years to come.

Jeffrey P. Wiener is president and co-managing director of the Kislak Co. in Woodbridge, NJ. He can be reached at [email protected]. The views expressed in this article are the author's own.