Founded in by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. With the stock market just under its all-time highs, it's getting more and more difficult to find investments that could be called "cheap.

Apartment real estate investment trust Equity Residential NYSE: EQR could be a smart way to invest in some of the most attractive rental markets in the United States, at a time when the homeownership rate is at a generational low. Homeownership Rate data by YCharts. The company owns or has an interest in apartment properties with nearly 80, individual housing units, most of which are located in expensive, high-barrier, urban rental markets. In fact, the entire portfolio is located in six coastal markets -- Boston, New York, D.

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Equity Residential specializes in apartment buildings in high-cost locations. Image is not one of EQR's properties.

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These markets have high costs of homeownership, as well as stronger-than-average growth in new renter household formations.

Equity has done a great job of increasing its income while managing expenses. Over the past decade, Equity's same-store revenue has grown at a 3. In addition to maximizing revenue at its existing properties, Equity has several other ways to create value for shareholders. Development is one way Equity adds value -- if you can build a property for less than its completed value, you can earn higher yields and create instant equity.

Renovations are another focus right now. Now could be a great time to get into one of the biggest and best apartment REITs at a discount. Many investors are reluctant to invest in physical retail of any kind, and who could blame them?

Many retailers are struggling to stay in business, and on the day that I write this, Bebe Stores announced plans to close all of its retail locations and focus on e-commerce. However, take a look at Tanger Outlets NYSE: SKT , which owns 44 outlet shopping centers in 22 states and Canada. One of my favorite things about Tanger is its growth potential.

This means that there are limited opportunities for acquisitions, but there is plenty of room for ground-up development, which as I discussed with Equity Residential, can be a great way to create value. The company has two projects currently under construction, and Tanger says that it has begun site selection and pre-development activities in other markets that aren't currently served by the outlet industry.

To be fair, both stocks could easily fall further, especially if interest rates rise faster than the market expects. Plus, there are company-specific risks involved with each of these stocks. Just to name a couple of examples, we could see an unexpected uptick in the homeownership rate, which could lead to reduced rental income for Equity Residential.

Or, Tanger could lose a major tenant to financial difficulties, which could cause the company's earnings to take a hit. The bottom line is that no stock capable of market-beating returns is without risk, and these two are certainly no exception. However, I believe that any negative catalysts are likely to be temporary and that both of these companies have bright futures ahead.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Tanger Factory Outlet Centers.

The Motley Fool has a disclosure policy. Matt brought his love of teaching and investing to the Fool in in order to help people invest better. Matt specializes in writing about the best opportunities in bank stocks, REITs, and personal finance, but loves any investment at the right price. Follow me on Twitter to keep up with all of the best financial coverage! Skip to main content The Motley Fool Fool.

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