In a year or so, Alan Crittenden figures, another real estate boom will be under way. By then, he says, buyers will be ready to take full advantage of lower interest rates and sellers will be trying to recoup some of the profits lost in the last few years when house prices were not moving up as much as inflation in general.
In the meantime, says Mr. Crittenden, publisher of a Novato, Calif., newsletter on real estate financing, a number of opportunities are opening up for people who want to invest in the mortgages behind the real estate, rather than the actual property.
The opportunities are coming from large real estate firms like Balcor Realty, brokerage houses like Merrill Lynch & Co., and real estate syndicators such as Integrated Resources Inc., a New York firm.
With many five- or 10-year investments paying 10 percent or less, people are becoming increasingly interested in longer-term investments that can pay a percentage point or two more. At the same time, they are looking for investments that provide some protection from taxes.
At Integrated Resources, for example, the investment appeal of real estate and mortgages recently led to the introduction of ''Harvest,'' a variable annuity that uses real estate-oriented investments. Being an annuity, it must be sold through an insurance company, and the firm has three insurance subsidiaries to serve this purpose.
Harvest's investments will mainly be in commercial office buildings, shopping centers, and multifamily residential properties. They will be made in the form of conventional mortgages, sale and leaseback transactions, and some US government-guaranteed mortgages.
The return on the annuity will come from the fixed interest on the mortgages and the appreciation of the underlying property values.
''You may not do as well buying a home in the next 10 years as you did in the last 10 years,'' says Daniel Perkins, Integrated Resources' vice-president for marketing. ''Trading up (buying increasingly valuable homes) may not work as well as it once did. With that background, there still will be a need to buy commercial buildings and property as the economy continues to move from manufacturing to services.''
Mr. Perkins says the main difference between Harvest and a limited partnership or real estate investment trust (REIT) is that Harvest is open-ended , while the the life span of the more traditional investments is usually limited to the term of the mortgages in the portfolio. Harvest will buy and sell mortgages and other instruments in its portfolio. The investor will be able to redeem or add to his investment at any time.
The minimum initial investment in Harvest is $5,000, unless it is being used for a qualified retirement plan, like an individual retirement account (IRA). In that case, the minimum is $100 in the first year.
The Merrill Lynch program, a spokesman says, involves bonds backed by home mortgages and sold to investors through a unit investment trust. The bonds have been issued by home-building firms, and Merrill Lynch expects to sell between $ 50 million and $150 million worth of them a month.
The unit trusts are paying a yield of 11.26 percent, and the units are sold in multiples of $1,000.
With more conventional unit trusts backed by the Government National Mortgage Association - or ''Ginnie Mae'' - investors receive monthly payments of both principal and interest, which eventually exhaust the investment. These bonds, on the other hand, make their monthly payments only from interest. Meanwhile, the principal accumulates, is reinvested, and is used to repay investors at the time the bonds are paid off.
''We're seeing a return to the old 30-year, fixed-payment mortgage,'' the spokesman said. ''What we're doing is offering mortgage originators a place to put those 30-year mortgages so they don't have to keep them on their books.''
And what investors in programs like these are getting is the chance to be in on the ''lending'' side of the mortgage business, gathering in a portion of the interest payments from a growing real estate market, particularly in commercial real estate.
'Socially responsible' mutual funds
In the process of finding a place for investments, I have been looking into mutual funds. The problem is that all the funds I have checked into have portfolios that include gambling, tobacco, alcohol, or drug products. I would like to find a good fund that does not include these products.WS- B. B. What you are looking for are funds that fall into the ''social responsibility'' category. While some of them may invest in a few of the industries you find objectionable, others do not. Three funds for sociallly responsible investing are Dreyfus Third Century Fund (767 Fifth Avenue, New York, N.Y. 10022); Foursquare Fund Inc. (24 Federal Street, Boston, Mass. 02109); and Pax World Fund (244 State Street, Portsmouth, N.H. 03801). Of the three, Foursquare, a load fund, seems to meet your criteria most closely. You may want to check on past performance records, as some of these funds have had fairly low rates of return.
If you would like a question considered for publication in this column, please send it to Moneywise, The Christian Science Monitor, One Norway Street, Boston, Mass. 02115. No personal replies can be given by mail or phone. References to investments are not an endorsement or recommendation by this newspaper.m