Can You Still Profit From Real Estate Pain?

Good news if you’re in the market for a new place. The vacancy rate for U.S. apartments reached their highest level in more than 20 years!

According to real estate research firm Reis Inc. the national vacancy rate is now 7.5%, a level we haven’t seen since 1987.

And more good news if you’re a would-be tenant. Second-quarter asking rents fell 0.7% from a year earlier to $1,040 a month, the largest single quarterly decline since Reis began tracking the data in 1999.

Clearly, the recession has taken a toll on the U.S. apartment market, which largely relies on employment growth to fuel demand. Its largest tenant group, 18- to 24-year-olds, has been hard hit by rising unemployment.

Without question the scenario is bad for landlords but how about you? Can investors still profit from their pain?

According to Karen Finerman, it may be too late. You have to be careful in this space, she explains. Although it makes sense to get short real estate I actually covered my position in AvalonBay because it's already made the move.

If you're looking to play the space from the short-side, make sure to first see how much your pick has already moved she counsels.

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Trader disclosure: On July 8th, 2009, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Seymour Owns (AA), (AAPL), (BAC), (BX), (EEM), (FXI), (F), (INFY), (SBUX); Seymour's Firm Owns (FCX); Terranova Owns (MSFT), (XBI), (ABT), (OIH), (RIMM), (SUN) ; Adami Owns (AGU), (C), (GS), (INTC), (MSFT), (NUE), (BTU); Finerman Owns (RIG), (TBT); Finerman's Firm Owns (FCN), (MSFT), (NOK), (PBR), (RIG), (TBT), (WMT), (FLS); Finerman's Firm Owns (BAC) Preferred; Finerman Owns (BAC) Preferred; Finerman's Firm Is Short (BAC), (IYR), (IJR), (MDY), (SPY), (USO)